CHICAGO, Feb 5 (Reuters) - The boisterous world Kevin Duffy entered 34 years ago to run paper slips into trading pits at the Chicago Board of Trade was an age apart from today, when open-outcry trading only intermittently disrupts the quiet hum of computers.
The Chicago corn market was a noisy, bruising, frantic place where traders and commercial brokers establish prices for future deliveries of grain. Trading on the CBOT had a self-descriptive moniker: “open outcry.”
Shoving and fist fights broke out over prices moves as small as a quarter cent per bushel of corn. Paramedics stood by for emergencies, including pencils stabbed into hands and even heart attacks.
The place will go mostly quiet in July, now that CME Group Inc announced Wednesday that agricultural futures trading on the floor will end in Chicago 167 years after Chicago merchants and brokers first gathered on the banks of the Chicago River to swap grain.
“It’s been a good run,” said Duffy, 56, on Thursday standing on the top step of Chicago Board of Trade corn pit, his trading perch for years.
The flow of CBOT orders, from farmers, grain processors and others, is at record levels today. With the corn crop double its size in the 1980s, the volume of trade in CBOT corn futures last month hit a single-day record of 1.45 million contracts. But less than 2 percent were traded by open outcry.
The price of CME Group memberships reflects the decline. A seat on the Board sold for a record $775,000 in 1997. The last sale of a full membership interest on the CBOT, now part of CME Group, went for $290,000 on Thursday.
Duffy has never left the CBOT since traveling from his home on the south side of Chicago, a recent college graduate, on Sept. 8, 1980. “Started as a runner at $4.65 an hour,” Duffy said. “We had the Russian grain embargo. I got on the phones.”
Duffy, no relation to CME Group Executive Chairman Terry Duffy, became a CBOT member in 1989, and has worn a bright-yellow plastic badge with initials “KED” abreast his bright red trading jacket since. He met his wife, Lu, at the Chicago Board of Trade when she worked in operations for a brokerage firm.
The biggest market he ever traded, Duffy said, was in 1996, when corn spiked amidst a surge of demand from China, crop-threatening weather and farmers trapped by hedges. Duffy handled orders for grain houses and trading firms, but would not say how much money he made.
Duffy said he and other pit traders first saw the potential demise of pit trading when the CBOT in 1997 started matching orders electronically, an effort to reach customers in Asia and Europe.
“The pit trader had the edge” over outsiders, Duffy said, because they could see orders coming into the pits. “Now the markets are instantaneous,” he added.
Duffy said he fears traders will lose their ability to “read” markets through the ebb and flow of open outcry. The wisdom of floor traders - encapsulated in sayings like “the trend is your friend” and “don’t stand in front of a train” -applies as much today as before electronic trading started in 1992, he said.
“Did you ever think E.F. Hutton would go out of business? Did you ever think floor trading would end?” asked Duffy, referring to the stock brokerage firm that met its demise in the 1980s. “A lot of people are pissed off. I get it.”
Duffy said he will close out his book in July and move on.
“I’ll miss the competitive fire, the adrenal rush,” Duffy said. He mentioned the din as the market opened each day. “There is nothing like openings and closings,” Duffy said.
Reporting by Christine Stebbins; Editing by Lisa Shumaker