Chicago's Eurodollar Open Outcry Pits Are Fighting For Their Lives To Remain Open Post-Pandemic

He said: “It seems like it should be easy to trade these complicated multi-legged strategies, but it’s just not. Brokers’ fiduciary responsibility as members is to get the best price for the end user.”

Before the shut down, the pit accounted for about half of the daily average volume in eurodollar options. But re-opening - given the physical demands of open outcry trading - is going to be tough. This means that the fate of the pit, perhaps for the long-term, is going to fall to the CME Group. Executives have said they wanted to re-open three weeks after the state lifts its stay-at-home order.

Market makers and floor brokers would have to sign a waiver to acknowledge they are working at their own risk. CME Chief Executive Officer Terry Duffy said on an April earnings call that keeping the floor open doesn't cost much and that he intended to abide by the rules that as long as the floor was more than 30% of trading volume, he'd keep it open. 

The question of whether or not people will have adapted to electronic trading by the time CME re-opens the pit remains to be seen. 

Thomas Fitch, founder and CEO of RVAssets, which supplies trading algorithms for eurodollar and Treasury options, said: “Nobody was prepared to go to 100% electronic, but the market did it with no problem whatsoever.” 

Chicago-based futures and options broker Albert Marquez concluded: “Under normal conditions, I would expect that most end-users would want the pit back. It’s far more efficient and markets are tighter. That being said, it’s not exactly the best time for eurodollar options with rates where they are.”

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