From trading pits to screens: the end of open outcry

How the pits worked

Open outcry was exactly what it sounds like. Every bid and every offer had to be cried out publicly, so the whole pit could hear the market at once. Traders stood on the tiered steps of polygonal pits, the CBOT built the first octagonal futures pit in 1870, so that hundreds of people could see each other’s hands. It was a continuous auction conducted with voices and palms.

Hand signals existed because voices alone could not carry across a roaring pit. Conventions varied by exchange, pit, and era, but the grammar was broadly shared:

• Palms facing inward meant buying; palms outward meant selling.
• Fingers held near the face showed price; away from the face, quantity.
• Every signal was public, because the whole pit was the market.

Brokers, locals, and the tape

Two kinds of members filled the pit. Floor brokers executed customer orders for a commission. Locals traded their own accounts, providing liquidity and living off tiny margins per trade. Traders wore brightly colored jackets so clerks could spot their firm across the floor, and each member carried a badge with a short mnemonic used to attribute trades. The system ran on reputation: in a fast market, two traders could fill each other with a nod and reconcile the paperwork afterward, which worked because everyone knew they would see each other tomorrow.

The pit’s byproduct was information. Exchange staff recorded the shouted trades into a running tape, the ancestor of the Time & Sales window, and the visible crowd itself was data: a trader could watch who was buying, who was trapped, and where the size sat. Locals paid for membership precisely because that view was an edge. Much of what modern platforms display is an attempt to rebuild it.

The first screens, 1987 to 1992

The October 1987 crash, when the Dow fell 22.6 percent in a single session, pushed exchanges to think beyond floor hours and local crowds. CME partnered with Reuters on an electronic system called Globex, and on February 2, 1989 the CFTC approved CME’s rules for it, describing Globex as the first international electronic trading system. The first electronic futures trades ran on Globex in June 1992, initially for after-hours dealing while the pits were closed.

The floor establishment was not thrilled, and early volumes were thin: a screen next to a roaring pit offered little. Through the 1990s the pressure built anyway. Newer exchanges in Europe launched fully electronic from the start, without a floor to protect, and began taking volume in products that had always belonged to pits. Matching engines were cheaper to run, open longer, and reachable from anywhere.

The screen won outright when it got a contract of its own. In September 1997 the CME launched the E-mini S&P 500, electronic-only on Globex, at one fifth the size of the pit contract that had grown beyond $500,000 in notional value. It traded more than 7,000 contracts on day one. Retail traders, locked out of the pit by both location and size, finally had a contract built for them.

The screen takes over

Through the 2000s, electronic volume overtook pit volume contract by contract. The screen removed the phone chain from customer to desk to clerk to broker in the pit, replaced hand signals with firm, auditable orders, and let anyone with a connection trade from anywhere. Exchange consolidation put most US futures on one electronic venue: CME acquired the CBOT in 2007 to form CME Group and added NYMEX in 2008.

The trader’s interface changed with the market. The pit local’s working knowledge, who is bidding, who is offering, what just traded and in what size, reappeared as software: the depth-of-market price ladder for resting bids and offers, and Time & Sales for the executed tape. In Aeris, that ladder is the DOM with click-to-trade, a direct descendant of the local’s view of the crowd. The order-flow glossary defines the modern descendants, from the DOM to footprint charts and cumulative delta.

The shift also changed who could compete. Once orders traveled as data, they could be generated by programs, and algorithmic and high-frequency trading grew through the 2000s on the back of electronic order books, exchange APIs, and co-located servers near the matching engine. The pit’s information edge became a speed edge measured in microseconds. The new market was more open and more auditable than the floor ever was, but it could also go wrong at a speed no crowd could match.

The pits close, 2015

On February 4, 2015, CME Group announced it would close most of its open outcry futures pits in Chicago and New York by July 2, 2015. The reason was a single stark number: open outcry had fallen to one percent of the company’s total futures volume. The equity index futures pits went first, after the June 2015 expiry. The floor-based S&P 500 futures pit stayed open at the time because it still served the open outcry options-on-futures market, and most options pits remained active on both floors.

What ended that summer was face-to-face futures price discovery, a practice that began when the CBOT opened in 1848. What continued was everything else: the same contracts, the same clearinghouse, the same daily settlement, now matched by a computer instead of a crowd. The pit did not die because it failed at its job. It died because the screen did the same job with a complete audit trail and a global audience.

The lesson of May 6, 2010

Electronic speed brought failure modes the pit never had. That week, headlines about the Greek debt crisis had already put markets on edge, and volatility was elevated before anything unusual happened. According to the joint staff report published by the CFTC and SEC on September 30, 2010, it was against that backdrop of high volatility and thinning liquidity that, at 2:32 p.m. Eastern, a large mutual fund complex began selling 75,000 E-mini S&P 500 contracts, valued at about $4.1 billion, to hedge an existing equity position. The sell algorithm was programmed to keep pace with volume.

What followed took minutes:

• High-frequency traders absorbed the first contracts and passed them back and forth, which raised volume, which made the algorithm sell faster.
• Between 2:41 and 2:45:27 p.m., the E-mini fell more than 5 percent.
• In one 14-second window, high-frequency firms traded more than 27,000 contracts, about 49 percent of the volume.
• At 2:45:28 p.m., CME’s Stop Logic paused the E-mini for five seconds.

What the flash crash changed

Broad indexes had fallen about 9 percent at their lows before largely recovering by the close. Because many trades printed at absurd prices, the exchanges and FINRA canceled thousands of them afterward under clearly erroneous rules, a decision the joint report discusses at length and one that punished some traders who had done nothing unusual. In the months that followed, regulators and exchanges introduced single-stock circuit breakers and tightened marketwide pause rules, adding to the circuit breakers adopted after the 1987 crash.

The durable lesson: in electronic markets, displayed liquidity can vanish in seconds, and risk controls like price limits and trading pauses are part of market design, not an afterthought. For the individual trader, the practical version is simpler: stop orders can slip far beyond their trigger in a fast market, and no platform can guarantee an exit price when the book empties.

What the modern terminal inherits from the pit

Look at a modern futures workstation and you are looking at a pit rebuilt as software:

• The DOM ladder is the pit drawn vertically: resting bids below the market, offers above, the inside market at the center, your own orders and position overlaid.
• Time & Sales is the exchange tape the pit reporters once wrote by hand.
• Footprint charts, volume profiles, and cumulative delta are descendants of the tape reading that locals practiced by eye.

What was lost

The pit was also a labor market and a school: generations of Chicago and New York traders started as runners and clerks, learned order flow by watching it, and graduated to trading their own account. When the pits closed, that apprenticeship closed with them, and veterans still argue that no heatmap replaces the feel of a crowd leaning one way. The honest answer is that the feel was never free: it belonged to the few hundred people who could afford a membership and a place on the steps.

Access changed as much as interface. What once required an exchange membership, a badge, and a place on the steps now requires a computer, a data feed, and a brokerage account, and micro contracts since 2019 have cut the capital needed to a fraction of the old pit-size exposure. What did not change is risk. The pit ruined careless locals one trade at a time. The screen simply lets the rest of us make the same mistakes faster, which is why risk management matters more, not less, in the electronic era.

Where Aeris fits

The pit’s price ladder became the Aeris DOM with click-to-trade: the same column of bids and offers a local once read off the crowd, now with order entry built in. The hand-written tape became Time & Sales, and the locals’ tape reading became footprint charts and cumulative volume delta. All of it runs on Aeris’s own Rust chart engine, native on Windows and macOS, instead of a booth rented beside the pit.

The access story ends the way the floor always promised. A simulated account stands in for the clerk’s apprenticeship, a place to learn order flow without risking a dollar, and live futures trade through your own Rithmic account. And for the lesson of May 2010, that the book can empty in seconds, flatten and the kill switch are free on every plan.

If you want to see what the pit became, the download page has the installer, and the comparison pages show how Aeris stacks up against other platforms. The tools have changed beyond recognition since 1848. The job, reading the market and managing risk, has not.