I have heard that the 30 yr pit is "deserted" owing to the electronic market. Is that so? What about the other bond pits? If there are traders in the ring, they must be arbiraging the screen traders, correct (at least some of them)?
I don't know about the individual pits, but the entire financial room is pretty damn quite these days.
It is quiet, but that does not necessarily mean there aren't guys trading. Every single local in the 10yr pit has a screen that they trade on (with one exception, Hardy Brumfield's filling broker and clerk). The same is said for the 2 and 5yr pits, as these guys are all spreaders, so Autospreader has probably benefitted them to some extent. The 30yr pit is deserted from its heyday, and this is the only pit left where there are a few small locals that do not trade off of screens. As for floor volumes, Goldman single handedly supports the 5yr futures pit, as they will do huge outright orders, calendar rolls, and yield curve spreads (this is all PIMCO business). The 5yr futures pit had its best rollover to date this past roll (helps when Goldman alone rolled 80,000 in the pit and countless other houses 20,000 plus). The 10yr pit gets some large 5,000 plus orders every once in awhile, and the 30yr is very slowly seeing a pickup in paper. Options are alive and well in the pits still. The floor is plugging along, doesn't make sense financially to close the room because it cost $120 million dollars, and no one will buy it, so essentially it is just a meeting place for traders these days trading on their screens. All of the major brokerage houses still call the desk guys and they just enter orders for them electronically at their desks.
thanks Mcurto. So what's the "edge" to trade futures notes and bonds at CBOT floor if every trader down there is using the screen?
The edge now is much different, rather than profiting from the bid/offer during the heyday the locals are now using the floor to gather information about order flow. It seems to me they have slowly changed their trading styles to adapt to these much less volatile markets. They generally know when stops on the screen will be hit as the small ones get hit in the pit. At times when there are decent sized orders in the pit it gives them a cue as to the size of the rest of that order on the screen. They can discuss positions with other locals or watch what the other bigger locals are doing on their screen. A lot of info still floats around on the floor, a lot better than sitting in an office by yourself staring at the screen. It is what you make of it these days, the guys that just sit around all day and complain, waiting to be fed by brokers won't last much longer. Those that try to learn and improve their trading will be around for a long time.