|
PureBytes Links
Trading Reference Links
|
Saw this article on the net. Thought it would interest the groups. We have
had some interesting discussions on this in the past.
Neil
_________
CBOT BOARD APPROVES ALL-DAY COMPUTER TRADING
By Greg Burns
Tribune Staff Writer
July 29, 1998
In a major break with its past, the Chicago Board of Trade on Tuesday took a
step toward replacing the traditional open-outcry trading of its U.S.
Treasury futures contracts with an electronic network.
By a 20-1 vote, the exchange board approved a plan to list the flagship
Treasury contracts on its so-called Project A computer system during the
same daytime hours when they're being traded in the boisterous pits,
beginning Sept. 28.
The plan is subject to an Aug. 18 membership vote, as well as regulatory
approvals. And it depends on exchange staff making Project A computer
terminals widely available on the trading floor, and programming wallboards
to display Project A price quotations.
It would be the first time a Chicago futures exchange has offered full-size
versions of its top contracts electronically during regular business hours.
The move is aimed at fending off competition from the proposed Cantor
Financial Futures Exchange, a computerized trading system that is seeking
regulatory approval to list Treasury futures.
Tuesday's vote was a "preemptive strike on any entity which might emerge as
our competitor," said CBOT Chairman Patrick Arbor. "This decision
strengthens our members' ability to compete and win in the global market."
Exchange directors were worried that some of their members would use the
Cantor exchange, unless the Board of Trade offered them daytime trading of
bond futures, said veteran member Ray Cahnman. "If they don't pass this
thing, the Board of Trade members skilled at Project A will trade the Cantor
system."
The issue is certain to strike an emotive cord at the exchange. Some traders
believe open-outcry trading can't survive a side-by-side test against
computers.
Chicago floor traders have been shaken by the all-electronic Eurex
Deutschland's recent takeover of German bund futures trading from the
open-outcry London International Financial Futures Exchange.
Even more shocking was the sudden demise of open-outcry futures trading at
the Paris Matif, where an electronic system introduced side-by-side rendered
the pits obsolete within weeks.
Yet some traders discount the fears about computers making floor traders
obsolete. "A lot of people are scared of their own shadow," said Board of
Trade member John Schmidt. "I think we're going to be here a long time."
Even Cahnman, a booster of the Project A plan, said he expects relatively
little business to shift from the liquid open-outcry bond pit to the Project
A screen, at least initially.
Still, the Board of Trade's willingness to prepare for a future where orders
are matched on a computer instead of through the shouting and arm-waving of
open-outcry reflects a pronounced change in sentiment.
Futures exchanges worldwide are coming under pressure to computerize.
Membership seat prices at open-outcry exchanges in Chicago and elsewhere
have declined steeply recently amid worries that electronic trading will
dominate.
Send the text of this story to someone's email address
Browse the Tribune archive for other articles
|