Open-outcry grain trading at the 156-year-old Kansas City Board of Trade will go quiet in June as new owner CME Group moves the once-raucous pits to Chicago.
CME, owner of the Chicago Board of Trade, bought the Kansas City wheat exchange last year, cementing its dominance in global grain trading after a challenge from rival IntercontinentalExchange.
The closure of the floor in Kansas City caught few by surprise on Monday as a surge in electronic trading over the past seven years has left the pits sparsely populated. The Minneapolis Grain Exchange closed its wheat trading floor in 2008 due to low volumes.
Still, it will the end of an era in Kansas City, where stock index futures were born and contracts representing billions of bushels of bread wheat change hands each year.
The last day of open-outcry trading on the KCBT floor will be June 28.
"You hate to see great old institution pass on to oblivion, and that is what has happened to Kansas City," said Dennis Gartman, a well-known investor and former KCBT board member.
Kansas City's main pit, for hard red winter wheat futures, could comfortably fit several dozen traders.
In recent years, though, it has been largely empty as many traders prefer to do their business on computer screens set up on desktops scattered around the trading floor.
It's a far cry from a few years ago, when the floor was buzzing and bustling with frenetic traders who fought their way in and out of the packed circular pits.
Some of the remaining floor traders are planning to relocate to Chicago to continue trading, while others will move on to other jobs or trade totally electronically.
"The thing has come to an end," said Morgan Shay, a trader at the exchange since 1971. "The handwriting was on the wall when the electronic started. We are sad to see it go, but I'd rather concentrate on how well we did."
"WE CAN TRADE ANYWHERE"
CME will operate an electronic trading center on the former KCBT floor until the end of September, from which Kansas City-based traders will be able to execute trades on CME's electronic trading platform.
Some KCBT traders, sensing the end was near for the floor, recently started working from rental space in suburban Kansas City, instead of at the exchange.
Just 41 wheat futures contracts traded hands in the KCBT pits on Friday, while 26,573 contracts traded electronically.
"We have a screen so we can trade anywhere," said one trader, who did not want his name used.
CME owns most of the KCBT building, whose facade boasts a giant wheat stalk that appears to be waving in the wind, but it has not yet decided whether to sell it, a spokeswoman said.
She did not immediately know how much money it cost to keep the floor open.
CME said it can make trading more efficient by locating the KCBT wheat futures and options pits next to the CBOT wheat pits.
KCBT trades a high-protein variety of wheat used to make bread, while CBOT trades a lower-quality variety used to make doughnuts and snack foods.
"By moving Kansas City wheat to the Chicago floor later this year, we will make it as efficient as possible for our customers to trade both products and the spread between the two," said Bryan Durkin, CME chief operating officer, in a statement.
CME said it does not plan to close its Chicago trading floor. KCBT executives declined to comment.
The proximity of the pits could improve spread opportunities and the overall execution of trades, said Sterling Smith, futures specialist at Citigroup in Chicago, who noted he was not surprised by the move.
The move "just marks the continued evolution of the futures trading business," he said.