Open Outcry On the Outs in Chicago?
The future of open outcry trading at the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME) is once again a hot topic in the Windy City’s futures markets. Over the last two months, the Chicago exchanges have announced major electronic trading initiatives, rekindling speculation that open outcry will go the way of the dinosaur.
While the CBOT recently received the green light from its members to form a technology partnership with Eurex–the German/Swiss derivatives market–the Merc in July launched daytime electronic trading for its flagship Eurodollar contract.
Not surprisingly, among industry observers in Chicago, there is a mix of opinions about the future of open outcry. Michael Manning–a member of the CBOT’s board of directors and the chief operating officer of Chicago-based FCM Rand Financial Services–says that he does not expect the Eurex partnership to expedite the elimination of open outcry at the CBOT.
That said, he says it would be "foolish" to think that open outcry will always be around. "I would say that there is some limit to open outcry’s life span, but I couldn’t tell whether it’s two years or five years," Manning says.
On the other hand, Les Rosenthal, a managing partner at the Rosenthal-Collins Group expects that open outcry trading will "eventually prevail" over electronic trading. "I’m starting to be impressed by the ability of open outcry, at least in Chicago, to turn back all sorts of electronic challengers," says Rosenthal.
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