CBOE, which runs the Chicago Board Options Exchange trading floor as well as an electronic exchange, has a market share of 19.5 percent that will double with its planned $3.2 billion acquisition of Bats Global Markets. Nasdaq also grew this year with the $1.1 billion purchase of the International Securities Exchange. Box's floor will be smaller than legacy operations, with 3,400 square feet leased and under construction in the Chicago Board of Trade Building. There's room for up to 35 traders and brokers, though there may be as few as five at the start, Boyle says. “As long as he gets over 20 (people), I think he'll have a good crowd,” says Hazem Dawani, CEO of Chicago-based Options-City Software. “Otherwise, the value proposition becomes lower.” Boyle isn't saying which firms he expects to show up, but he says they're the usual big names in options trading—firms like Chicago-based Citadel and Wolverine, as well as Bala Cynwyd, Pa.-based Susquehanna. Wolverine Execution Services Partner Joe Sacchetti says his firm's clients, including pensions and hedge funds, “have expressed interest” in the floor. “We are looking forward to seeing the final rules and market structure that Box is proposing,” he says. Citadel declines to comment. “There are people who think this is going to re-create the 1980s or the 1990s, and that is not correct,” Boyle says of Chicagoans nostalgic about fading decades of floor trading in the city. “This is moving forward to make the open outcry environment more efficient than it currently is.” The Box floor would be the first in Chicago since CBOE opened its pioneering operation in 1973. There are copycats in Philadelphia, New York and San Francisco, but floors are mainly contracting now. Floor-based options trading has persisted partly because the trades are often complex, with a vast universe of possible strike prices and expiration dates on hundreds of corporate names. CBOE vows to keep open at least part of its floor as long as customers want it. CME says the same about its pits for trading options on futures contracts (it closed its futures pits last year). Veteran Chicago traders may soon have another floor to visit.
Chicago-based Box Holdings Group 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 Options, 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.