One of the remaining open-out-cry trading floors is to close as the electronic trading epidemic spreads across all asset classes. Intercontinental Exchange which acquired the 142 year old New York Cotton Exchange has announced plans to terminate floor trading and switch their entire business to an electronic system by October 2012.
The ICE exchange confirmed that online Options trading has dramatically increased. In April 2011 only 10% of Options were traded on the floor. The ICE Futures U.S. options contracts that will be affected are the sugar No. 11, cotton No. 2, coffee “C”, cocoa and frozen concentrated orange juice.
The soft commodities are currently trading at:
US Sugar No.11 (Oct 12) $22.41
US Cotton No.2 (Oct 12) $71.92
US Coffee C (Sep 12) $173.97
Orange Juice (Sep 12) $109.72
ICE offers a variety of futures and options, including energy, agriculture and soft commodities. ICE was ranked 12th among the world’s top 30 exchanges in 2011, in terms of volume, according to the Futures Industry Association. The exchange reported 381.1 million contracts traded in 2011, up 15.9% from 328.9 million contracts in 2010, according to the FIA’s annual volume survey released in March 2012.
Electronic trading has grown substantially since it was first introduced in the 70’s. Retail FX is a product of simple and easy access to financial markets through the World Wide Web.
Major exchanges which have introduced electronic trading moving away from open outcry include:
• The London Stock Exchange – 1986
• The Borsa Italiana, – 1994
• The Toronto Stock Exchange – 1997
• New York Stock Exchange – 2006
• New York Mercantile Exchange – 2006
Spot FX brokers have been exploring the benefits of FX Options as regulators are restricting leverage. Forex Magnates team wrote a report on how FX Options operate and the benefits for brokers, available in the Q2 quarterly report.
1) I’m surprised all markets have not gone to electronic trading as of late. Part of it is just pit traders that just do not want to relinquish the cash cow of pit trading.
2) Open-E-Cry is the name of a brokerage. Open Outcry is the correct term to describe how orders are traditionally placed in an auction-style bidding market.