In an effort to entice more of its members to electronically route orders to floor brokers, the Chicago Board of Trade, on Aug. 28, will launch eopenoutcry.com--an Internet-enabled order-entry system.
To date, 15 CBOT members have signed up to use the browser-based eopenoutcry.com, and the exchange has another six users in the pipeline. Eventually, eopenoutcry.com is expected to replaces TOPSRoute, the CBOT's incumbent order-entry platform.
Simultaneous to the roll out of the new order-entry system, the exchange is also adopting the trading engine of Eurex--the German derivatives market the CBOT agreed to join forces with last year. By implementing the Eurex engine in place of its incumbent Project A electronic trading platform, the CBOT will be delivering to its members the ability to trade both German and U.S. derivatives contracts via a single trading screen.
Tom McCabe, managing director of the order-routing business unit at the CBOT, says that exchange expects to completely phase out TOPSRoute, in favor of eopenoutcry.com, by Memorial Day of next year. Members, he notes, can electronically route orders to floor brokers equipped with handheld PCs (known as Electronic Clerks) through TOPSRoute today.
However, while asserting that the system has served its purpose, McCabe says TOPSRoute is now a 10-year-old, mainframe-based system that no longer meets the technology needs of the CBOT's members. "If you wanted to put a Tops terminal in your office in London today, you'd have to run a telecommunications line from London to the Board of Trade," McCabe explains. In contrast, any CBOT member with an Internet Service Provider connection can make use of the eopenoutcry.com platform.
The target audience for the new order-entry system is CBOT members and their "introducing brokers," says McCabe. Clients of the eopenoutcry.com system will be able to route orders to handheld PCs being used by CBOT floor brokers. Brokers will then execute those orders in the exchange's open outcry trading pits, and fills will be electronically reported back to the eopenoutcry.com end-user (normally, within one or two seconds). Right after the fill is sent to the end-user, it will also be automatically inputted into the exchange's risk management and clearing systems.
Currently, says McCabe, roughly 30% of agricultural orders and 19% of financial orders at the CBOT are electronically routed to handheld PCs. Those figures are up from 24% and 12%, respectively, at the beginning of this year.
What's more, he says, the total number of orders delivered to handheld PCs has jumped from 1.1 million in all of 1999 to 2.2 million (to date) in 2000. But McCabe also expects the new, easier-to-use eopenoutcry.com system to substantially increase the percentage of orders being electronically routed to handhelds. In fact, McCabe says, a few months ago, the CBOT's board voted to mandate that all of the exchange members route at least 25% of their orders to handheld PCs by the end of 2000.
However, despite the exchange's ongoing efforts to automate its trading floor, it's possible that the CBOT's open outcry pits will go away all together. Through its adoption of the Eurex trading engine, the exchange will be giving members the ability to electronically trade all of its contracts--plus Eurex's products--during the majority of CBOT's normal working hours.
McCabe declines to speculate on whether he expects members' order flow to migrate over to the Eurex platform. Today, more than 90% of the exchange's orders are executed in the open outcry pits.