ICE floor traders ready for all-electronic dealings
By Marcy Nicholson
Fri Dec 14, 12:21 PM ET
NEW YORK (Reuters) - Floor traders were not fazed on Friday by news that pit trading of agricultural commodities at the Intercontinental Exchange (ICE)(ICE.N) will close permanently early next year as the market goes all-electronic.
Some floor dealers said volatility in certain commodities may increase while others forecast that a "chunk" of business will be lost by their office when screen trading takes over.
"The move off the floor will not have much effect on cocoa as 90 percent is done on screen. Cotton and coffee may be a different story and those markets will probably find a bit more increase in volatility as more volume finds its way to the screen and stops are used more electronically than in the pit," one ICE trader said.
The IntercontinentalExchange (ICE.N), which bought the New York Board of Trade in January 2007 and later renamed it ICE Futures, announced Thursday that it will end open-outcry trade in all of its U.S. agricultural futures contracts at the end of February.
Shortly after purchasing the exchange, ICE introduced side-by-side electronic and open-outcry trade for soft commodities including coffee, cocoa, cotton, frozen concentrated orange juice and sugar.
The electronic volume quickly became the dominant platform for the futures contracts while options are still traded only in the pit.
"It will take away a chunk of business, but the options pit will still be there and we already are doing stuff electronically. We're not going anywhere," a sugar dealer for a financial house said.
The floor will remain available to traders who want to continue to conduct business there, where they can use the electronic platform, said ICE spokeswoman Sarah Stashak.
"Many of the floor guys are already trading electronically so it's not like many will be losing their jobs. They're using the screen because it's cheaper," a dealer for a brokerage house said.
ICE Futures employs about 200 people, of which a small percentage are directly associated with open-outcry, Stashak said.
"In light of the announcement, we will review our staffing levels," she said.
Open interest and daily settlement prices will continue to be reported in the same way, although it will be indicated in the quote for electronic contracts, and there will not be any disruption to the way contracts are delivered, she said.
"The electronic trading hours will be what they are today. At this point we haven't made any announcement," Stashak said.
ICE Futures products will be available on the ICE electronic platform starting late March 2 for the trade date of March 3.
"My only complaint is the long hours of watching quotes all day when the community of 'softs' traders participate mostly during a few prime-time hours," and ICE cocoa trader said in an E-mail.
Most of the futures trade on the screen from 1:30 a.m. to 3:15 |
