CME Group has announced that its New York options trading floor will close at the end of this year, 12 months after their open-outcry futures pits in Chicago and New York were closed.
As of 2017, products listed at the firm's Nymex and Comex exchanges will only be available for trading via electronic means. Some traders have commented that the decision to close the New York floor has been on the table for some time, while others have put question marks over why the closure has taken this long.
In options trading, buyers can bet on prices without having to commit to taking on the underlying asset. The sector has become more complex of late, as participants have discovered more ways to hedge against commodity market volatility.
The hope among floor traders was that this would allow the open-outcry pits to remain healthy, but average daily volumes for options trading in New York have dropped by over half since February of last year, down to just 7,500 contracts. Most of CME's futures pits were closed in July last year.
By contrast, last week saw over 200,000 crude oil options contracts finalised on Globex, CME's electronic trading platform, while around 3,000 contracts changed hands on the floor.
However, P.J. Quaid, an open-outcry corn options trader at the Chicago Board of Trade (CBOT), maintains that the pits still play a key role in the execution of complex transactions in Chicago. The CME has asserted that pits will remain open so long as customer demand exists.