Nymex was having problems with the interphase to globex for awhile. had to do it the old fashioned way, called the floor.
Thats why no matter what they will never be able to completely get rid of the floor. Times like this make the floor priceless! There will always be breakdowns in this technology but as long as people still can scream and shout trades will always be completed. Let this be yet another message to all of you pit haters out there.
Floor days are numbered. No other way around it. Look at Eurex, they seem to be fine without floor. I remember once when all of a sudden Eurex went down. It reopenned in 1 or so hours, trading continued as it never happenned. Everyone who used to trade in pit, says that pits look like ghost towns these days.
I still need the floor as does other marketers. I use EFS's to lay off cash risk and prefer the floor to work spreads over globex. If I use globex on spreads, I may get 15 different prices on 15 spreads and have to enter the deals in on both sides and create opposite swaps for our accounting system. This would be 32 deals entered for a 15 lot spread. Fuck that, keep a few guys around. That environment was the greatest job I have had in my professional career, it was not like going to work everyday but rather like hanging out with buddies.
It ain't priceless, in fact a NYMEX seat is worth about $7 mil, down about $4 mil from a few months ago. Trend is your friend? Sure, we need the floor for spreads and more arcane institutional stuff, but technology will fill the void in due time. If anything, today was a good example of how risk was easily laid off on alternative venues without having to resort to open outcry "fast market" chicanery.
The reason the seat (actually the bundle with the stock) is going down in value is because they lowered the shares from 90,000 to to 75,000 to 60,000. The value of the seat itself is down from 1.1 million to 700k. I think what happened today was somewhat screwed up in that it basically took the public (those who have never used the floor to trade) out of the game. They rallied the pit and when Globex opens we have stops running and panic buying. In my opinion. I think if globex is going to be down then the pit should also be halted. I bet it was a great day for any trader who still shows up at the exchange.
Exactly....I recall Globex going down a few years ago, no ES trading. It was down all day...opened sometime in the middle of the night. When it went down we were declining. But as soon as it went down we bottomed, and went up the rest of the day. Classic. The pit took full advantage of the situation. Alot of similarities here. In fairness, you could have hedged with WTI futures. But I completely agree....I think they should close the pit. OldTrader
By WTI futures you mean the ICE Last day swap? That is true. I just think if they expect to move to a new medium they should act as if it is the main one. I clerked at the exchange last summer and I know as soon as word got out that globex was down everyone was bid.
Not sure what you mean by "last day swap". ICE offers a cash settled future on West Texas Intermediate, symbol WTI, 1000 barrel contract. Trades pretty much tick for tick with CL. OldTrader