I was in NY today, giving a press conference at NYMEX about my WTI study. After that, I went down to the floor for a (taped) interview about the study with CNBC.
Wow. How the world has changed. I haven't been on an exchange floor in a while; increased security post-9/11 has made it much more difficult. But I spent a good deal of time on the floors in Chicago in the 80s, and in the 90s. I was at the CBT the day the new trading floor was opened for a dry run: I remember watching hundreds of traders lining up at the entrance, like marathoners before a race, then sprinting to stake out a place in the new bond and note pits. There was an indescribable energy on the floor. It escapes my powers of description, really. It's something you had to experience.
And the operative thing there is the tense of "to have." You HAD to experience it, because you really can't experience it anymore. And that's what I experienced first hand at NYMEX today. I was taping right next to the crude oil pit. Back in the day, there is no way you could have stood there, and conducted an interview to be played on TV: the noise would have made it impossible. No problem today. The few handfuls of traders in the pit were all reading newspapers. I was there probably 15-20 minutes, and didn't see one trade. Not one.
Yeah, there was some action in the options pit, but the futures pits were essentially D-E-A-D dead.
Above the pits were many Trading Technology* screens, which were reporting the action from the electronic trading. That's where all the action was. If there was a visual symbol of the dominance of electronic trading, that would be it. The blinking blue and red screens, lording over the pit, almost mocking it with their continuous movement symbolizing a live, moving market while the pit itself was almost funereally silent.
I have mixed emotions about this. In the early-to-mid-90s I was pretty outspoken in my opinions that electronic trading would make the floor obsolete. I was ridiculed, publicly and in print, by the CEO of LIFFE, for my research showing that the electronic DTB Bund futures market was as liquid as the LIFFE's floor market; he was not alone in his views. I resisted the temptation to return the…
