(Reuters) - The 142-year-old tradition of floor-based open-outcry trading at the former New York Cotton Exchange is coming to an end as the last of its contracts
-- options on futures tied to agricultural products such as sugar and cocoa -- go exclusively electronic.
IntercontinentalExchange Inc said on Thursday that electronic trading already makes up more than three quarters of all options volume at ICE Futures U.S., versus 10 percent in April 2011, and that it will shift to electronic-only options dealing after the close on Oct. 19.
While the move will be the end of an era for New York commodities trading, it came as no surprise to many given the sharp drop in activity since the floor's heyday and the small number of dealers who remain there.
"It's the way of the future. It's difficult to continue when they're losing a share of the volume every day," said James Cordier, founder and president at Liberty Trading Group in Tampa, Florida.
The ICE Futures U.S. options contracts that will be affected are the sugar No. 11, cotton No. 2, coffee "C", cocoa and frozen concentrated orange juice, the exchange said in a notice.
ICE futures trading went fully electronic in March 2008, but at the time the exchange lacked the capability to shift its options dealing to a fully electronic platform.
In March 2008, there were 330 floor traders
at ICE Futures U.S.'s New York facility. Now there are fewer than 100, not including clerks and staff.
"You could shoot a shot through the floor and not hit anybody," a cotton broker said of a recent visit to the floor.
ICE said it would maintain its New York facility for now for brokers who elect to use it. The site's lease runs out in mid-2013, and when it moves, ICE said it plans to provide an electronic dealing room for customers if needed.
Critics of the move say options dealing is better handled in face-to-face deals rather than by computer.
Gene Libertucci, a cotton trader who has worked in the pit
for 25 years, said the closure of the floor will mean the loss of expertise.
"It's an institution that's been down here for a long, long time, over a hundred years ... It's a boutique business where they have real knowledge of this industry and now it's going away. They're losing that, that expertise."
Out of the five contracts affected, the cocoa market has seen the biggest transfer of volume to the electronic platform, with 95 percent of trades
done by computer, according to ICE data.
Electronic volumes in cotton are the smallest, accounting for 65 percent of the contract
's total volume, followed by coffee (75 percent), sugar (79 percent), orange juice (82 percent).
Atlanta-based ICE bought the New York Board of Trade for about $1 billion in a deal that closed in early 2007. NYBOT originated in 1870 as the New York Cotton Exchange, founded by about 100 cotton brokers.
Group still maintains open-outcry trading in New York and Chicago, with the majority of the trading in both cities in options on futures.