Cboe bucked a few trends when it launched an open outcry trading floor on June 6.
With a lot of fanfare earlier this month, Cboe Global Markets, Inc., a Chicago-based exchanges company that offers trading, clearing, and investment solutions, bucked more than a few trends when it launched a hybrid, open outcry trading floor in “the historic Chicago Board of Trade (CBOT) building” at 141 West Jackson Boulevard.
“We are continuing to support open outcry with a new, state-of-the-art trading floor as our customers continue to find utility and value in the trading floor’s price discovery, execution quality, and the deep liquidity provided by our market makers and floor brokers,” a Cboe spokesperson tells FTF News.
The new trading floor took about a year to actually build.
“We broke ground at the construction site on June 1, 2021, and completed the build-out of the new trading floor by the end of the year. We began functional testing on the new floor in first-quarter 2022, and officially opened the new floor on June 6, 2022,” the spokesperson says. “There was an additional year of planning and work with designers, architects, engineers, and construction teams leading into the ground-breaking.”
Expect a bustling floor, the spokesperson says. “In terms of total headcount, we expect to have 350 to 400 brokers, market makers, and trading firm employees on the floor.”
The Cboe participants will be working amid many nods to the past. In fact, the new trading floor “returns to the same space where it was founded in 1973 as the first listed options exchange in the U.S.,” according to the Cboe announcement.
But the Cboe has expanded a little since 1973. The company notes that it now offers “trading solutions and products in multiple assets classes, including equities, derivatives, digital assets and FX [foreign exchange], across North America, Europe, and Asia Pacific.”
To accommodate all those transactions and markets, the new floor “spans the seventh and eighth floors, occupying more than 40,000 square feet, with double-height floor to ceiling windows that overlook Chicago’s historic LaSalle Street financial district,” Cboe officials say.
In particular, the new trading floor will consist of 10 trading pits, “including S&P 500 Index (SPX) options, Cboe Volatility Index (VIX) options, Russell 2000 Index (RUT) and SPDR S&P 500 ETF Trust (SPY) options pits,” according to Cboe.
This touted trading floor of the future will have interesting contrasts such as “a bell-ringing platform overlooking the trading pits” amid “state-of-the-art media broadcasting capabilities that include a ceiling-mounted camera track system,” officials say.
All participants will be assigned a designated trading kiosk and all network access “will be wireless or plug and play at any location. … Kiosks in the SPX trading pit will support a handheld device for market-makers, and floor brokers will have room for laptops, Cloud9, and PAR devices,” according to Cboe. “Kiosks in the equity, ETF, RUT, and VIX trading pits will support a laptop or desktop and monitors.”
Network connectivity is facilitated via “a Floor Access Network (FAN) for firm client devices consisting of both wired data jacks and wireless network access located at kiosks, in trading pits, and in firm booths throughout the new trading floor,” according to the Cboe.
For voice-trading, the new floor offers a voice communication solution from Cloud9 Technologies that is a voice over IP (VoIP), cloud-based service “offering a traditional turret, the Cloud Hub … provided by Cboe and will need to connect to a laptop or device provided either by the firm or by Cboe,” according to Cboe officials.
The new floor is a long way from Cboe’s first trading floor “in the CBOT’s former smoking lounge, a 4,000 square-foot space located on the fourth floor of the building. Cboe later expanded its trading floor to the seventh floor in response to growing demand for U.S. listed options trading,” according to Cboe officials.
“The CBOT Building continued to house Cboe’s trading pits in the late ’70s and early ’80s, until Cboe moved its headquarters to 400 S. LaSalle Street in 1984. In 2021, in a reflection of its continued commitment to Chicago, the company opened its new global headquarters in the city’s historic Old Post Office building on 433 W. Van Buren Street,” according to the Cboe.
Ultimately, the trading floor is a hybrid because Cboe’s customers have not gone all-electronic, and still need help from experienced humans.
“Typically, open outcry trading is more conducive to handling larger, more complex institutional orders, while electronic trading facilitates execution of smaller retail orders at fair and transparent prices, with speed and ease,” the spokesperson says. “For index options, a significant amount of volume continues to be executed via open outcry trading (36 percent on floor vs. 64 percent electronically.)”
With in-person trading comes the very contemporary challenge of the COVID-19 pandemic, and the need to stay on top of safety protocols.
“We continue to closely monitor developments around COVID-19 and have adjusted our safety protocols for the trading floor following guidance provided by governmental and public health agencies, which most recently includes the easing of certain mitigation measures, such as lifting mask and vaccine mandates for certain public spaces in the city of Chicago,” the spokesperson says.
Here’s a link to a video about the new floor: https://bit.ly/39KIUnJ