Will floor trading eventually become exstinct? There are no jobs on any of the major exchanges that don't involve computer programming. It is too sad. Computers have ruined trading!
Absolutely, Floor trading will go the way of the dinosaur. I was on the floor of the CME last Friday as a guest of a big firm. They said the volume in the pit was 1/4 of electronic trading. Pit traders, especially NY, screw the retail piker like me all the time, tha't why I won't trade any open out cry, none nada!
Its not about ruining the process of the trade, its about making it better - faster, more fair, more transparent and more cost effective. Here in europe we are managing all the markets fine without old-style floor traders, so why shouldn't you guys do the same? Whos missing the old days decades ago? Noooone. Come on, its time to take a step forward!
Don't specialists make prices inefficient and a bit more non random? Why would you want floor traders to go away? I like having 2 equity markets (nasdaq,nyse), at least you have a choice.
Because now it is all program trading. No good arb opportunities. Just a bunch of maths geeks. Where have all the pure traders gone?
Since I develop and run my own automated trading systems, and I am members of a few exchanges, I guess I am biased. Yes, in a way, today's electronic market is all about better models (better quants), faster speed to the market, etc, and people have complained that firms that can afford to pour millions into their system and tech infrastructure has the advantage. But the floor trading at times is worse, it is an old boys club, where I will feed order to you, not because you have a better price, it is because you are my friend / uncle / father-in-law / drinking / coke buddy, it doesn't matter the client would get nicked a ticker here and there, it is all about keeping it in the club (family). Honestly, even as an exchange member, I haven't been to the floor for over 8 months now (I am not even in the same city), and I won't miss it a bit. Yeah, the floor locals that can't adjust are at the end of their careers (NYSE members, welcome to new world), and I know a few that have sold their seats and opened bars, even one that is now driving an cab, but that's evolution.
Do you think the bid/ask system will become exstinct too? I am for having one price on multiple electronic exchanges. If everyone will be on computers, why do you need a bid/ask spread? Who will be the market makers and specialists.
I believe that eventually sub-penny pricing will happen. But there will still be a natural bid/ask, since there will still be a limit order book regardless if there is a market maker or specialist present. Since MMs are there to "facilitate" liquidity in the market place, if there is already sufficient liquidity, then the need for a MM is greatly reduced, probably to unnecessary. But in illiquid instruments, perhaps there still is a need for MMs, but then the key question is what kind of compensation (preference?) will be given to the MMs (since they would facilitate the liquid order flow), and some of today's exchanges institute a MM-first based allocation scheme, which I don't entirely agree with. For instance, BOX made a serious attempt at being a MM / specialist-less exchange, and it is surviving in being an alternative source of equity options liquidity, so maybe that's a model worth considering.
I agree on the program traders, the ER2 has become a joke with program trading. I am moving on to another market until the violent whip calms down. Today was okay for trend though.