CME To Close Most Trading Pits

Discussion in 'Wall St. News' started by jeb9999, Feb 4, 2015.

  1. xandman


    I really wonder how seats will hold value. They are nothing more than discount coupons. They don't even have voting priviledges, do they?
    TraDaToR likes this.
  2. loyek590


  3. i960


    This seems mostly targeted at index futures. I presume other popular non-CME specific pits are still to remain open?
  4. TraDaToR


  5. OK Mr pit expert, please tell me exactly how often they get a large order.

    S&P 500 pit volume for 02/04 was 3,095 contracts

    S&P 500 pit volume for 02/05 was 3,011 contracts

    RTH the ES trades more than 3,000 contracts a minute.

    The S&P 500 pit is an antediluvian relic of the vagous past.
  6. loyek590


    I don't think anybody knows exactly when the next big order will appear, and I've never had one, but the pit remains open to accommodate those few large orders, and will remain open as long as those few large orders make it profitable
  7. i960


    Also, while I don't disagree that ES has way more volume - those contract numbers can't be compared 1:1 due to the relative size differences of ES vs SP.
  8. Yes but the value of contracts traded can be compared.

    The Big contract is 5x the size of the ES. So, 3,000 Big contracts = about 15,000 ES. But the ES regularly trades >2 Million in a day.
  9. Urkel


    Some rumblings from the meeting on friday.


    Most upset were traders from the Treasury pits. They talked about how despite the low overall volume—less than 1% of total volume is traded on the floor—that there is still a vibrant roll every quarter and that floor brokers add value to customers by executing those rolls that are often more complex than simple calendar spreads.

    Several bond traders explained that many large institutional customers execute interest rates spreads with tails. That is one side of the spread is larger. Often floor brokers can add value by giving up a slight edge on the calendar spread and gaining an edge on the roll. CME Group officials acknowledged that that the functionality to execute a roll with tails currently does not exist on Globex but that they are working on it.

    Several members said that the numbers in the pit increases dramatically during rolls.

    One member said, “We execute a boatload of spreads on the roll for institutional customers including Morgan Stanley, UBS and Smith Barney. Can’t do that on the screen, you can’t do a spread with a tail. A lot of traders are really pissed off.”

    Also the volume create by spreads can be exponential as the locals on the other side will need to exit those positions.

    “What surprises me most is that they say they were being as transparent,” one bond trader added. “If they were as transparent as they said, why are all my customers calling me up and saying they were blindsided by this.”

    Another member said that management had talked about transparency but added, “There is a difference between block trade transparency and open outcry transparency.”
    #10     Feb 9, 2015