Posted by: usset001 | October 24, 2008

My pit trading days are over

Actually, they ended 20 years ago. Despite the passing of two decades, I kept the thought alive of one day returning to the trading pit in Minneapolis. This mornings press release from the MGEX puts an end to that possibilty. “After a long history of futures and options open outcry trading, MGEX (Minneapolis Grain Exchange or Exchange) is closing its trading pits effective December 19, 2008.” Technology and change march on.

Electronic “side-by-side” trading began in August of 2006, at the MGEX and at the CBOT. By December of 2006, electronic trading accounted for over 50% of the volume in corn futures trading. Last month, electronic trading accounted for 86% of the futures volume in the corn pit. The shift to electrionic trading of spring wheat futures in Minneapolis did not occur as fast. In the first year of side-by-side trading, electronic volume held a relatively steady 20-25% share of total volume. But the share of electronic volume grew steadily over the past year, finally crossing the 50% level last June and reaching nearly 60% of volume in September. Trading in Minneapolis spring wheat futures is not deep enough to sustain a pit when the majority of trading occurs in the electronic market.

This is the end of an era. I know where I will be on December 19, 2008.


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