When the Chicago Mercantile Exchange closes most of its futures trading pits in July, people will doubtless lose their jobs.
But it’s not the number of jobs that will be lost that is significant — trading floors have been shrinking for years — it’s the kind of jobs.
The brokers, runners, and clerks that have been coming together in organised chaos to trade commodities contracts — noisily — for more than 100 years will be a thing of the past.
And that apparent chaos is what set the CME trading floor apart from others: not everybody in the room was a Harvard or Columbia grad. For the whole thing to work, not everybody needed to be.
The New York Times’ William Alden put it this way:
Futures trading — as distinguished from options trading, its more cerebral relative — was for many years a way for those with a blue-collar background to enter the white-collar world.
There was a lot for the young and hungry to do in the pits.
Runners, who deliver market orders from order takers to floor traders and back, were integral parts of the machinery — they were important links between the customer and the trader — and they didn’t need a college degree.
Arbitrage clerks succeeded if they were quick and alert — not because of family connections or years of trading experience.
Unlike other trading floors, up to this day in Chicago’s futures pits there was a certain career path that the less-educated, the less-connected, or simply the less-experienced could take to success. That path will close over for good once the pits are shut down.
“It’s no longer a way for a working-class guy with street smarts and a huge native intelligence to make a lot of money” said one cultural anthropologist interviewed by the Times.
That increasingly sophisticated technology is eliminating blue-collar jobs is nothing new. But it does signal the end of the era of Lew Ranieris, Ace Greenbergs, and other back office/clerk-to-CEO, rags-to-riches icons of Wall Street.
And if you want to get really nostalgic, you should probably watch The Pit, a documentary made in 2009. It features a bunch of guys talking about how they fought it out in the pits and got rich — and how that’s not something you’ll ever get to do.