By Susan Diesenhouse Tribune staff reporter Published January 25, 2006 Moving closer to trading its grain products electronically, the directors of the Chicago Board of Trade on Tuesday voted to ask for sole authority to determine when those contracts will be traded by computer as well as by traders on its floor. On March 8, the board will ask the 2,211 voting member-shareholders of the exchange to approve the rule change enabling the 18-person board to make that decision at the appropriate time. If the rule change is not approved, the entire membership would have to decide to usher in electronic trading, a cumbersome, politically fraught process. When asked about the timing of the board's vote and what the significance of electronic grain trading might be, a CBOT spokeswoman declined to comment. But others see this as the beginning of another major change at the 158-year-old exchange, which went public last fall. For the CBOT to initiate "side-by-side" trading would bring its grain contracts into the modern world of financial markets, said some traders and analysts. "It's a new world for the grain market," said Steven Bruce, a broker-trader for Man Financial Inc. who works in the grain pits at the CBOT. "Other commodities like oil and meat trade electronically. If we don't do it with grains, some other exchange will." Of the approximately 2.7 million derivatives contracts traded at the CBOT each day, 364,572 are for grain products: soybeans, corn, rice and wheat. Of those contracts, 98 percent are traded in the pits. Overall, about 70 percent of all trades each day are electronic, a spokeswoman said. Agricultural products make up about 20 percent of CBOT contracts, a figure much smaller than it once was, but still a significant portion of the exchange's business, said Meghan Crowe, an equity analyst at Morningstar Inc. "Moving to the screen will standardize these contracts, making them easier to trade, more liquid, because they'll be easier to get in and out of," she said. "Investors will react positively because it will boost trading volume and it's the way all exchanges are going." Tuesday's vote "is the start of moving to electronic grain trading, which is a natural evolution," said Ron Papanek, a director at RiskMetrics, a New York risk-management firm. "The demand for electronic trading is global." Once agricultural futures start trading electronically, it's likely to attract more hedge funds and other speculators to the CBOT, he added. "There will be job losses in the ag pits, but they'll probably find other markets to trade in, like the CBOT options pit," said Papanek.