Things were old-school yesterday in the trading pits in Chicago.
All corn and wheat futures and options halted on Globex were settled via the open outcry method following a technical glitch, the CME Group announced yesterday.
Open-outcry is a form of communication on the trading floor where traders use hand signals to exchange information about buy and sell orders. This type of face-to-face trading has basically died out in recent years with the rise of electronic trading.
However, even when the exchange flipped to an electronic platform, there was still open-outcry trading in the pits.
Most of the futures are traded electronically, though. So when Globex went down yesterday, all the electronic traders rushed down to the pits to hand the paper flow from the big customers because they couldn’t do so on the screen.
Yesterday’s glitch came at very important time of the month. It’s what traders refer to as an “Index Roll.” This means that the index funds and the exchange-traded funds (ETFs) that buy the front of the month are rolling out of that contract to buy the next month’s contract.
So instead of clicking on a screen, those electronic traders had to give their order to the floor brokers. The pits were totally alive yesterday afternoon.
“It was great. It actually felt alive in this room. Just to hear the noise. I’m the biggest advocate of open outcry. It was super loud. It was old school. It was transparent. You can see who’s doing what instead of just the market flickering,” a trader, who will remain anonymous, explained.
Check out this mobile phone video of yesterday’s close taken my an anonymous trader (Apologies for the grainy image, but you can just hear the excitement in the pit):