Category: Markets / Finance / May 14, 2013 6:57 PM EDT
This is what many envision when they think of a trading floor like the New York Mercantile Exchange (NYMEX); however, the day-to-day life of a floor trader has changed drastically from the old days as electronic trading becomes the new norm.
Jeff Grossman, President of BRG Brokerage Inc., has been working on the floor of NYMEX just about longer than anyone and has seen first-hand how the exchange has gone from a roaring trading floor, to what is now just a small band of traders who are losing their voice to electronic trading. Grossman weighed in with IBTimes TV's Jessica Menton about his experience over the last three decades working on the NYMEX trading floor.
What began as the Butter and Cheese Exchange in 1872 evolved to the New York Mercantile Exchange in 1882: the world's largest physical commodity futures exchange and a preeminent forum for energy and metals trading.
NYMEX once held a virtual monopoly on commodity trading, but in the early 2000s the electronically based exchanges, such as the Intercontinental Exchange, Inc. (ICE), started taking away the business of the open outcry markets.
Although executives at NYMEX felt that electronic trading was the only way to keep the exchange competitive, most open outcry traders were against it because it threatened their jobs.
In 2006, NYMEX teamed up with the Chicago Mercantile Exchange to use the CME Globex electronic trading platform, which made CME the exclusive electronic trading services provider for NYMEX's energy futures and options contracts through 2016.
CME Group Inc. (NASDAQ: CME), which also owns the Chicago Mercantile Exchange and Chicago Board of Trade, acquired NYMEX Holdings, Inc. in 2008.
Since then, the trading pits have emptied out as mostly computers are now performing the bids.
Grossman is one of the few traders trying to preserve the open outcry system.