A bunch of CME Group independent floor traders, commonly referred to as "locals," made a splash Friday after staging a walkout boycotting pit-trading options of Eurodollar futures — the most actively traded interest rate product at the exchange.
The protest followed a controversial trade the previous day known was a "block trade" — a privately negotiated order/trade that's performed off site, but cleared by the exchange and then posted on the CME's website minutes later.
We're told by a source that block trades have been going on for years, but because the Eurodollar futures pit is the busiest one at the exchange, they're getting more attention.
While the biggest gripe we heard from a local at the CME is that floor traders are not privy to the information when a block trade happens so they get "blindsided" and can lose a lot of money, not all traders seem to feel sorry for them.
Take Thomas Grisafi, Indiana Grain Company CEO, for instance. Hours after the walk-out at the CME Group, Grisafi Tweeted the following.
Grisafi said in a telephone interview with Business Insider on Monday that he was "joking around" saying that he walked out of his home office in the country, TGA Farms.
"I was being a smart ass. 'I'm so mad that I just walked out.' I was mocking the guys on the floor," he said.
Grisafi left the corn pit at the exchange about ten years ago and now trades ~99% electronically.
"I could care less [sic] what happens on the floor," he said. "People walking out of the pit means nothing to me."
He thinks that over time people will trade at the most efficient place and that seems to be on the screen.
"You could do it on the screen in ten seconds. People go with what works best for them," he said.
He explained that although screen trading has its faults (high frequency trading, flash crashes, etc.) in the end you can get so much more done.
Two other traders we spoke to on Friday had similar comments about the locals' being a thing of the past.
Here's one response:
"Dumb? Dunno but this dinosaur left the tar pit a long time ago
Where r they going? Cog hill?"
Here's another.
"I think it's just a sign of the times that the floor trader is probably becoming a dinosaur," an independent commodities trader told us. "It's the last bastion in the pit. Option locals make money off the bid-ask. In theory, if they manage positions they get paid on volume and when volume doesn't come to the pit, their ability to make profit is hindered. It's a sign that the pit trader is rapidly becoming extinct."
"I'm sure the guy who made buggy whips was upset, too," Grisafi said. "Things change."
