For sure. I'm talking 20-50 SPX contract spreads, where the desk is death. I think the smaller size and the fact that they're spreads are a factor. Also, the electronic SPX market is just really efficient, I pretty much always get the mid or just off mid there if it's a true mid and within a reasonable distance from the current market, so not much a desk can improve unless you want to move really big order without impacting the market.
A dedicated SPX book and trader is worth their weight in gold. Yes you need size.There is more OI upstairs than in the pit. No good if the CME is down, but then again nothing is. There wouldn't be dedicated desks and OI upstairs if it didn't serve a purpose. Sort of the dark pools of SPX except with an S&P license. If the pit serves you well - then by all means stay with it. It's also very easy for the desk to carry OI and hedge as long as the CME is alive. Plus the pit leaks information when it shows an order.