Thursday, October 11, 2012

Invert, always invert

Earlier in the week I went back to the KCBT to hang w/friends and take a look at the trading floor and's tough to say how much longer it and the only other futures trading floors in Chicago and NY will be around.  A quick look at the stats show that only about 1% of futures volumes are executed in the pits at these exchanges although options still have about half their volumes done on the floor. 

Since the trading pits continually get quieter to near silence, I have to invoke Carl Gustav Jacob Jacobi's adage to "invert, always invert" and think back to a time when there wasn't enough physical space in the trading pits, specifically at the CBOT.  Various articles from the Chicago Tribune are pieced together below to get the proper lookback at that time. 

The push to find new space for the financial contracts at the CBOT began in the early 90s although relief didn't come until 1997 when the new 'bond room' opened.  Many options were considered at the time including a cohabitation for some contracts at the relatively spacious new CME floor, constructing a new space in the CBOE building, or even moving the financials into the CME's former home on W. Jackson before eventually settling on what eventually happened which was building a new facility in back of the CBOT.

The decision to build the bond room was highly contested and dominated the exchange elections in 1992, particularly on the ability to afford what came at an eventual $175 million cost.  After CBOT members rejected previous building plans, a referendum on whether to proceed in early 1994 was hotly contested by some veteran members, some of whom were later convinced, although there were many high profile endorsers who won out.  Approval was authorized in late 1994 by a referendum of 669-176 and ground was broken in early 1995.  During the time of negotiations, volume continued to climb to new records and seat prices followed accordingly to all time highs

The 60,000 sq ft trading floor was built on time and opened on February 18, 1997 with a capacity of 8,000 people and 60 ft ceilings which could accommodate a jumbo jet easily.  Fittingly the new floor was opened with the singing of the national anthem by Wayne Messmer who also did the same at the Blackhawks old barn.

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