Open outcry is dead, and the Chicago Board of Trade will never be the same. Long live the CBOT.
Well, that ‘s what you might say, anyway, if you were a fan of that deafening roar that was once the trading floor. All of that has been silenced by computers, which is where most of the trading has gone now for agricultural and other commodities. This recent article buried on the New York Times’s Dealbook web page tells the story, which is also part of Chicago history and Route 66 history, as the CBOT has been located on Route 66 for decades before the route existed.
CBOT is also important to the nation’s economic history. To quote Wikipedia: “In 1864, the CBOT listed the first ever standardized ‘exchange traded’ forward contracts, which were called futures contracts. In 1919, the Chicago Butter and Egg Board, a spin-off of the CBOT, was reorganized to enable member traders to allow futures trading, and its name was changed to Chicago Mercantile Exchange (CME).” Ever since its founding, CBOT has been an economic innovator. To Route 66 fans, however, the end of the open outcry system at CBOT means visitors will never again get to see actual trading being conducted – trading that means billions upon billions of dollars to the world economy. We, the public, will no longer get to see in action what it is that CBOT does. And I’ll miss that.
Personal observation: Once again, I wonder why I have to read the New York Times rather than the local papers if I want to get a thoughtful perspective on a local event or phenomenon. Reuters weighed in with a story nearly two years ago when someone filed suit to keep open-outcry prices as the benchmark for end-of-day settlement prices instead of capitulating to electronic trading prices. Modern Farmer ran a well done story three months later, and The Western Producer caught up in February 2015 after CBOT finally decided to close most of the pits; but the constantly shrinking Chicago Tribune merely ran the Reuters piece in 2013, then forgot about how CBOT was changing. Typical. And if there was any coverage of it by the Chicago Sun-Times, it didn’t show up in the search results. Sigh …
Yours truly remembers a very different CBOT, one that reigned for 165 years under open outcry (a system it developed, just as it did futures contracts) and will never return. I saw it for myself, every working day for a year.
The trading floor at the Chicago Board of Trade in 1993; note the brokers standing on the steps of the octagonal commodity pits. (Photo courtesy of Jeremy Kemp via Wikimedia Commons)