Two Legacies Under One Roof
May 19 marked a new milestone at the historic trading floor in the Chicago Board of Trade building at LaSalle Street and Jackson Boulevard in Chicago. For the first time in more than 100 years, all Chicago-based futures pits are under a single roof.
The integration of the Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT) trading floors to a single location at 141 W. Jackson Blvd. was the natural outcome of the exchanges' historic merger in mid-2007, which promised greater efficiencies to the exchanges and market participants alike. It also marks the first time that traders can see (and hear) trading on the entire yield curve, as well as on all the major equity index contracts.
"Bringing together all the open outcry markets under one roof has created new cross-product trading opportunities and enabled the trading firms to be more flexible and efficient in assigning personnel and resources," says Bryan Durkin, managing director and chief operating officer of CME Group. "We also believe our exchange can better address the needs of market participants by focusing resources on a single location."
Planning the move
Bringing all the floor traders under one roof required a level of planning worthy of a military operation. Detailed discussions began as soon as the CME-CBOT merger was completed in July 2007. CME Group developed a list of the areas that would be consolidated and designated a team of lead managers from both CBOT and CME to manage the policy, procedure and physical changes in each area.
A subcommittee of board members - Chris Stewart, Howard Siegel, Bill Salatich, Gary Katler, Marty Gepsman and Bob Corvino - acted as a conduit for communication between the floor population, management and the board. This strong emphasis on ongoing dialog enabled management and the board to be more sensitive to end users' needs and concerns about change.
Developing a methodical plan and disciplined timelines for each area required more time up front, but saved time as the transition gathered steam. The teams developed a process to identify and solve potential roadblocks, resulting in many issues being solved almost as soon as they were identified.
The scope of the project was vast, and built upon the technology integration simultaneously under way. The trading floor needed to accommodate 45 different class A firms and 2,500 additional traders, clerks, brokers and others moving over from the CME location half a mile away at 20 S. Wacker Drive. Physical changes ranged from subtle to substantial. Almost all the CBOT financial trading pits had to be moved to a greater or lesser degree to make room for the CME-traded products. Booths were built or reassigned. A completely new wallboard system was mounted. Thousands of new phone and data lines were installed so that CME phone numbers could be transferred to the CBOT location between one trading day and the next. No detail was too small to note - for example, traders trying out their new pit for the first time pulled out the tape measure to verify that one step was two inches shallower than in the old pit.
As part of the project, CME Group teams also helped evaluate technologies being used on the CME and CBOT trading floors. The goal was to identify the most user-friendly, robust and scalable platforms for use on the consolidated trading floor. Once decisions were made on which technologies to adopt, the trading floor operations staff trained floor personnel on technology that was new to them. For example, CME traders learned the CBOT electronic order routing system and CBOT traders were trained on CME handhelds. From January through early March, about 100 employees also were trained on a new price reporting system.
All in a weekend's work The actual move took place over three weekends. The CME equity complex relocated over the first weekend in April and began full operation at the CBOT's historic art deco building on Monday, April 7. The foreign exchange (FX) and interest rate complexes moved over the last weekend in April and began operation in their new home on Monday, April 28. Finally, the commodity complex made its transition over the third weekend in May, starting to trade at 141 W. Jackson on Monday, May 19. "We held a series of mock trading sessions that were designed to identify potential issues prior to live trading on Day one," says Julie Holzrichter, managing director of operations for CME Group. "Our expectations and planning were validated through the process as we received positive feedback from our customers. That's a testimony to the hard work of hundreds of people – especially the operations staff, project managers, technology team members and construction crews." In conjunction with the trading floor consolidation, the CME Globex Learning Center will move this summer from 20 S. Wacker to 141 W. Jackson. The newly renamed Trading Knowledge Center will be located on the mezzanine level of the Van Buren Street entrance. The 1,500-square-foot center will enable market participants to learn the basics of electronic trading in a simulated environment using CME Group workstations, trading and charting software from various independent software vendors (ISVs), and real-time news and data feeds. The center also will provide access to industry periodicals, books, journals and various seminars.
'New' floor highlights More than 3.3 million contracts per day traded via open outcry in the first quarter of 2008, making the consolidated CME Group trading floor a very busy place. "There's a different 'vibe' when everyone is on the same floor," Holzrichter notes. S&P futures and options are now positioned in the northwest section of the integrated trading floor, adjacent to the Dow futures and options. FX futures and options are to the northeast, with Eurodollar contracts to the southeast. The agricultural complex is accommodated in the southwest quadrant and an adjacent room. Nearly 1,500 booths ring the trading floor. Media cameras will continue to capture the activity and roar of the floor from a platform overlooking the S&P pits and on the opposite side of the floor overlooking the Eurodollar futures pit.
"Coming together on one trading floor is a hugely historical moment for our institutions," says Durkin. "But it also shows how dynamic and resilient our markets are. We integrated the CME Group trading floor in a way that was largely transparent to end users, thanks to a lot of forethought, confidence, and ability to manage dozens of operational and technical issues. I'm very pleased and proud of everyone who made it happen, from our members to our market reporters."
"We've been so busy with the hubbub of the integration that I think it will take the next year for us to truly realize its significance - maybe, when we see cross-trading evolve so that Dow traders routinely spread against the S&P contracts and Eurodollar traders add Treasury contracts. There is a lot of opportunity here."
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