July 27, 2012

After 142 years, the frenzy of the open-outcry commodities markets in New York epitomized in the 1983 movie 'Trading Places' (see video below), where traders gesture and yell across pits to trade, is no more.

Formerly known as the New York Board of Trade, the ICE Futures U.S exchange was the main venue for U.S futures and options on cocoa, coffee, cotton, orange juice and sugar.

Its history dates back to the New York Cotton Exchange, founded in 1870, which later became the Coffee, Sugar and Cocoa Exchange. In 1998, they merged to form the New York Board of Trade.

IntercontinentalExchange, which bought the exchange in 2007, said yesterday that from October 22 all options listed on ICE Futures U.S will trade exclusively through its electronic trading system.

The move to close down its trading floor comes four years after ICE shifted all futures trading to computers. Still, the trading floor continued to be a venue for options on futures as these were seen as too complex to trade only electronically.

But in the past year, as options functionality on the ICE platform increased, electronic trading of options accelerated. In April 2011, electronic execution accounted for approximately 10% of options volume, compared to more than 75% today, ICE said in a release.

"The rapid adoption of electronic trading by options market participants is strong validation of the capabilities ICE has built into its electronic trading platform," said Ben Jackson, president of ICE Futures U.S. "

In January, ICE imposed a $6,000 annual access and usage fee on floor traders who failed to meet volume targets, the Financial Times reports.

About 100 floor traders are still in action today, down from 150 a year ago and 330 when ICE ended floor-based futures trading in March 2008.

"You could shoot a shot through the floor and not hit anybody," a cotton broker told Reuters, speaking about a recent visit to the floor.

“I don’t see how the floor closing better serves the customer or the merchant that uses options products,” Thomas Butler, a cotton broker who chairs the ICE executive floor committee, told the FT. “I feel it was a little bit premature, but inevitable.”

ICE Futures U.S rents space on the seventh floor of the New York Mercantile Exchange building from its rival CME Group, under a lease that expires in June 2013.

The New York Board of Trade had been in the space in 2003, after the September 11 attacks destroyed its former location in the World Trade Center.

The FT reports that in 2013, IntercontinentalExchange plans to move to the office space in Manhattan that was formerly occupied by disgraced futures broker MF Global – whose primary regulator was CME Group. An electronic “dealing room” will be available for brokers who need one, ICE said.

ABOUT THE AUTHOR
Melanie Rodier has worked as a print and broadcast journalist for over 10 years, covering business and finance, general news, and film trade news. Prior to joining Wall Street & Technology in ...