CBOT e-trade makes a move in corn as volume surges
CHICAGO, Sept 14 (Reuters) - Electronic trading of grains at the Chicago Board of Trade, which was expanded to daytime hours just last month, has already displayed its potential to uproot the traditional style of 'pit' trading.
Traders on Thursday said screen-based trading of the CBOT's benchmark December corn futures contract on Wednesday outpaced for the first time the volume of trades handled by traders shouting out buy and sell orders from pits at the exchange.
It was a significant development since the CBOT (BOT.N: Quote, Profile, Research) expanded e-trading of its agricultural futures beyond nighttime hours on Aug. 1 in a bid to boost the futures volume in corn, soybeans, wheat and other commoditiess at the world's largest grain exchange.
On Wednesday, 51,125 December corn futures contracts traded electronically versus 42,755 lots in the pit. Of the total e-volume, 43,148 contracts traded during the day.
"Everyone thought it would happen but it's happening quickly," said a veteran CBOT floor trader.
The exchange confirmed this was the first time e-volume in one contract surpassed that in pit trading. But total corn or agricultural screen volume has yet to overtake the pit.
Many traders had expected e-volume to explode after the 158-year-old exchange took the historic step of offering its oldest contracts for daytime electronic trade -- a move seen as catching up with the futures industry.
At least 80 percent of the CBOT's financial contracts trade electronically as market participants like the easy access provided by screens.
During the first month of "side-by-side" order entry of its grain futures, in which customers can have orders filled by computers or pit brokers, 18 percent was traded electronically. That was up from 2 percent a year ago when CBOT grains only traded at night.
Electronic trading in corn took hold the fastest, with 27 percent of the volume in August posted on the screen.
"A lot of the electronic volume is actually coming from the pit guys," the trader said.
Local Chicago traders -- those who trade on their own accounts -- are standing in the pits with electronic devices, making markets in both arenas, traders said. |
