At least that’s what it seems like in New York, where Nymex Holdings, the parent of the New York Mercantile Exchange (Nymex), is slashing costs through the next three months, specifically targeting the population of its trading floor, which has seen volume dwindle as more contracts are traded through an electronic alliance with the Chicago Mercantile Exchange (CME).
Floor trading volume dropped by half in the second quarter of 2007 compared with last year, when Nymex agreed to start trading its contracts on the CME's Globex electronic system. Energy futures and options volume averaged 257,000 contracts on the Nymex in the second quarter, compared with 537,000 in the same period last year. Meanwhile, electronic trading volume soared more than 400%.
Nymex Chairman Richard Schaeffer indicated in a conference call this week that changes involving the trading floor may be coming sooner rather than later. A Forbes story quotes Schaeffer as saying, “These [changes] aren’t things that are going to be put off for six months.”
And with the CME’s recent merger with the Chicago Board of Trade (CBOT), where all CME pits will eventually be moved to the CBOT’s floor, we will soon — by next year — have one less trading floor in Chicago, though by combining their floors it will probably prolong the floor’s existence.
The news is startling coming from Nymex who had for years fiercely defended its floor while Chicago exchanges moved more proactively towards electronic trading.
People in the industry have been talking for years about how electronic trading will eventually lead to the end of all trading floors, like it did in Europe. But, as a life-long Chicagoan with a fondness for the way trading floors paved the way for this industry, I still always hold on to the idea that at the very least, the Chicago and New York floors will persist forever.