When the Chicago Board of Trade opened its new financial floor in 1998 it actual size was remarkable but it was also criticized by many as folly—for the writing was already on the wall for the future of open outcry—and it was labeled the Arboretum for the man (CBOT Chairman Pat Arbor) most responsible for having it built.

Today it may be known as the last bastion for open outcry trading. CME Group is working feverishly to splice up this enormous space to encompass all of the Chicago Mercantile Exchange products along with the CBOT financial products. Some products will not make the move (Frozen Pork Bellies for one) but there is safety in numbers and the merging of the products of these two great exchanges onto one trading floor will probably prolong the life of open outcry in Chicago. See floor plan. Download file

On Sept. 4, CME Group revealed some of that plan distributing a floor plan and a migration timeline to traders and clerks on the floor. See plan. Download file

A rumor I heard while visiting with an old friend from my trading floor days (who is still working on the floor) is that the enormous Chicago Board of Trade Treasury floor (aka the Arboretum) would be partially split by a wall separating Chicago Mercantile Exchange products and CBOT products once the floors merge to prevent traders from moving from pit to pit. The idea sounds like a stretch as one of the main benefits of the merger is the synergies of being able to trade related products side by side, such as the CME’s three-month Eurodollar interest rate futures and the CBOT Fed Funds futures, where there is an ongoing arbitrage. My friend didn’t think it made much sense either. We both assumed that the CME Ag products would be placed adjacent the CBOT grain complex and the financials would be in shouting distance of each other.

I happened to run into former CBOT Chairman and now CME Group Vice Chairman Charlie Carey who said he didn’t hear any such thing and that the only possible idea in that regard being discussed is fencing off (I took that to mean figuratively) products as one membership/trading privilege will not be able to access the products of another.

Carey acknowledged that to expedite negotiations on the merger, the CBOT and the CME put off details on combining the various memberships and at the outset Class B shareholders of either exchange would only be able to trade the products allowed by their particular membership category. Carey says he doesn’t know how things will eventually be worked out but added that there is a market for the separate trading privileges and members/Class B shareholders can purchase the right to trade additional products.

This will be a tricky issue but one that will eventually have to be worked out. A main benefit of combining the floor is that the remaining liquidity providers (locals) would have more products to make markets in as the bulk of trading moves to the electronic venue.