New film captures waning heyday of Chicago trading pits
CHICAGO (Reuters) - The loud, colorful traders who jostle for deals in Chicago's famed open-outcry pits now face an even greater threat than the advent of electronic dealing systems -- the algorithmic trade, says the director of a new documentary charting the demise of floor trading.
More a living funeral than a eulogy, the film "Floored" that debuted on Friday recounts the transition from the bustling salad days of burly alpha males to a market dominated by faceless computer-based traders across the globe.
It's sink or swim for the veteran pit traders featured in the film, struggling to adapt from a world of multicolored jackets and arcane hand signals to executing trades with a series of keystrokes at home in the suburbs.
"The older guy, the guy basically like me who is not computer orientated, they're gone -- they are out of the business," Joe Bedore, vice president of floor trading for INTL/FC Stone, told Reuters.
But it's not the final chapter, warns director James Allen Smith, who traded mini-stock index futures electronically and spent some time in the pits of the Chicago Mercantile Exchange and the Chicago Board of Trade -- now merged -- before he filmed the documentary over a three-year period.
"We talk about the floor going to a mouse. But obviously what's happened from there is the mouse is now going to completely automated trading," Smith, 37, said in an interview before his first film shows in narrow release in Chicago, New York and Washington.
"Let's say five years ago you jumped off the floor and started trading on a computer, well now you are getting smoked by automated systems. That's the next chapter."
The number of floor traders has shrunk to just 1,000 compared to more than 10,000 during the 1990s, according to the film. Only about a third of all traders successfully make the transition from floor to screen, one veteran CBOT floor trader said on Friday.
"It just takes a totally different kind of person to stay on your feet and scream and yell all day in a brooding environment than it does to sit patiently and quietly in a room and click a mouse," Smith said in an interview.
"You can't see each other in the eye, and that's what these guys were pros at -- they were masters at reading emotion."
For some of the traders, the movie was a way to preserve a lost way of life for the next generation.
"The floors that were shown are no longer there (at the former CME location) -- the owners chopped them up," Joseph Gibbons, a former floor trader who started in 1985 and now trades financial futures from his home, said at the screening. "This was a way to get something done to show our kids."
(Reporting by Michael Hirtzer, Editing by Jonathan Leff)