Chicago exchange to start open-outcry floor
Chicago-based Box Options is building an open-outcry trading floor in a bid to attract traders who prefer floor trading for big orders. Many trading floors have been closed in favour of more efficient and transparent electronic systems over the past two decades. But Ed Boyle, CEO of parent company Box Holdings Group, said that while many people would like to see less floor trading, "there are some types of trades that are better suited to the floor". He hopes to open the trading floor in January.
Box Options Exchange is building the first new trading floor in Chicago in decades, bucking a trend of shrinking and shuttering pits nationwide.

Over the past 20 years, major exchanges such as Chicago operators CBOE Holdings and CME Group have closed pits in favor of more efficient and transparent electronic systems. “Many people would like to see less floor trading rather than more, and I wouldn't rule myself out,” says Ed Boyle, CEO of parent Box Holdings Group. “But the fact of the matter is, there are some types of trades that are better suited to the floor.”

Boyle expects to attract traders who prefer open outcry for big orders and keep them with a more efficient 21st-century floor model. Whether traders partake remains to be seen, with Box still finalizing new rules after the Securities and Exchange Commission rejected an initial set. Boyle planned to open the floor in December but now has his sights set on January.

“We would certainly be receptive to hearing about it, but the devil is in the details,” says Joe Silletto, CEO of Global Execution Brokers, an options-trading affiliate of Susquehanna International Group.

Boyle, 54, is no stranger to trading floors. He started trading at CBOE as a broker in 1985 and saw activity dwindle before he left in 1999. Later, he worked at Chicago high-speed trading firm Getco before joining Chicago-based Box in 2013; he became CEO last year.

He says the SEC rejected Box's first set of proposed rules for the new floor because of “nits,” or minor technical issues he's confident about fixing. Other industry voices may chime in once the proposal is available for review on the SEC website.

Box, which already operates an electronic exchange, doesn't have much to lose. It handled just 2.4 percent of the industry's options volume this month. That's down from 2.9 percent for November last year, but up slightly from 2.1 percent in 2014, according to Options Clearing Corp.

The small exchange is battling a field of 13 mostly larger rivals (some of which have the same owner), and overall industry trading volume has flagged in recent years, down from a peak in 2011, according to Options Clearing Corp. Consolidation followed.