-- Connecting the dots between our economy, government and business --
The exchange operator CME Group Inc. said it would permanently close most of its open-outcry trading pits in Chicago, ending one of the world’s last vestiges of old-fashioned floor trading.
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
SIGN UP HERE FOR OUR FREE WIREPOINTS DAILY NEWSLETTER
RIP Chicago. Even the price of corn and soybeans is leaving. Wow
It is good that it is closing. Watching Illinois failure has become a fun to watch thing.
CME makes more money off electronic trading than open outcry. This was a fait accompli back in 1997 when the e-mini was introduced. Options pits are still more efficient than a call around market due to the complexities of many options trades. When quantum computing goes mainstream, they will be gone for sure if not sooner. The days of being “3-4 50 up” in trading are gone. In order to be a trader today, you need to understand calculus, and if you want to be an active local trader either be a position trader with lots of cash, or learn… Read more »
So many of those floor traders traded big and lived big. Most of them were wiped out years ago. It is a different skill set to trade these days.
I worked on the floor for a few years. There is an advantage in being on the floor and knowing what orders are in someone’s deck and hitting the price that triggers the big order. You don’t have that advantage trading online. I ran into a trader a few years after the floors on Wacker closed. He was working as a photographer, doubt he was making anywhere near the same amount of money.
Was illegal to disclose what was in your deck; however, because of the time it took for an order to get into the pit, there were a lot of large resting orders all over the place. Electronic trading made it so you could enter/exit the market quickly. No need to have resting orders. Most of us that traded on the floor don’t trade anymore. A lot of people I know killed themselves, got divorced etc. I don’t trade anymore-and if the pits were open I certainly would trade. But, mostly for the social network. 5000 people on the floor that… Read more »
The geeks rule the world now; and the skill set of being a tall, loud, risk taking dude belongs with the dinosaurs. Tall, loud, risk taking dudes started with the Homeric epics and ended around the time of WWII. It’s been nothing but latte drinking soy eating quants since then. Even our fighter pilots don’t fight in planes, they fly drones from thousands of miles away, drinking soy latte mochas.
All true, but then…why stay in Illinois or Chicago? There is a certain ruthless sociopathic attitude common to Illinois residents (who don’t care about corrupt government destroying fellow humans so long as they perceive their own needs are being met) and traders (who joke, quite cleverly, on the instant of market-moving calamities).
But that attitude of beggar-thy-neighbor for profit can be exported.
Why stay?
Chicago has the network. Stay until they force you out. Traders weren’t sociopathic, but could be ruthless.
I agree in part…traders aren’t necessarily sociopaths… but still believe Illinois voters/nonvoters are. Illinoisans ae willing to take so much from other Illinoisans for reasons of desire or convenience. What happens when immediate-term survival is at stake?
I traded on the Mercantile Exchange for three years in the early 80’s – paid for law school and then some, so I guess it was a worthwhile effort. I did not live big, saved every penny I earned except for food and rent. Even then, with some foresight, one could see electronic trading controlling the future. My markets then were small and relatively inefficient – what I did bears no reality to trading today.
I agree with Jeff Carter. Culture matters to a fin tech industry. I hold no hope that Chicago or Illinois will appreciate retaining that culture.
CBT, CBOE, CME were/are big revenue sources for Chicago and Illinois. If Physical trading pits are obsolete, what keeps these businesses in Chicago? Electronic trading can be done from anywhere with high speed data lines…lines needed if the trading is by tape-racing quants. Electronic trading can be done from absolutely anywhere at all when trading is peer-to-peer (somewhat explains crypto de-fi boom).
There are some network effects from having a bunch of computer programmers in the same town. It sounds silly, but there are. The computerized traders have their own networks-they meet at bars and coffee shops to talk shop just like traders did. The killer would be a transaction tax. If the computerized traders aren’t talking about moving en masse to one city to preserve their network, they need to be thinking about that.
Never underestimate Chicago’s and/or Illinois’ ability to scare off tens of thousands of six-figure jobs with a singular tax.
I guess nixit’s point was that which I failed to articulate properly