[ I N D E P T H | C H I C A G O T R A D I N G F L O O R S ]
didn ’ t pan out and the fund began to hemorrhage , sending ripples across the market that almost collapsed the financial system in 1998 .
“ The opening bell came out and the bonds went limit-up , limit-down , limit-up , limit-down - there were people laying on the floor . It was just chaos . My mentor took my badge out of my pocket , turned it around so nobody could see my acronym , put it back in my pocket , karate chopped my arm and said : keep your hands down , something ’ s going down ! Emotionally , your first reaction is to be scared , but if you show fear people will be all over you ,” says Cavanaugh .
“ I looked over and there was a guy laying on the floor and I ' m thinking what ' s he doing ? What ' s going on ? That was my first twominute indoctrination into the world of trading . The bond market went crazy . If you were caught on the wrong side of it … the guy laying on the floor had fainted because he had a position on that went against them and he just collapsed .”
Mike left the trading pits in 2003 , departing CBOT to become an account executive for My Futures Online , an online futures and options brokerage . He is now managing partner at proprietary investment fund , Regiment Alpha . To him , the trading pits had been heading in one direction since the introduction of electronic trading . By 2005 , just 30 % of trading volumes came from open outcry trading .
“ The floor was dead in 2004 , it just slowly died at an ambulatory pace ,” Cavanaugh adds . “ When the news came out on 5 May , I was more shocked that it took more than 20 years to close the pits . Look at the London Futures Exchange [ LIFFE ], that went electronic and in seven days London went from having floor traders to the wealthiest cab drivers in the world .
“ It is a publicly traded company and the electricity and air conditioning bill to keep 70 people trading in the pit isn ' t worth the expense . [ CME Group ] may have used the pandemic as an easy way out . It ' s
“ Imagine the most non-politically correct , vile , filthy work environment you could possibly imagine and it ’ s filled with the greatest people you could ever meet .”
MIKE CAVANAUGH , MANAGING PARTNER , REGIMENT ALPHA , FORMER TRADER , CHICAGO BOARD OF TRADE
probably easier than saying the trading pits are no longer the most efficient way to execute orders and futures .”
Alert and attentive As the years went by and the portion of onexchange volumes being executed electronically continued to rise , other events added to the changing attitudes in the pits . Most prominently the merger of the CME and the CBOT to become CME Group in 2006 , which saw an exodus of traders leave the pits .
The inefficiencies of the open outcry model had become unavoidable when compared with on-
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