Starting in the late 19th century, commodities traders and brokers crammed each day into New York City’s trading pits, shouting, and signaling their way to a deal. They bought and sold contracts for raw materials and agricultural products like butter, sugar, cotton, cocoa beans, copper, and oil.
But this method of trading has been dying out for the past decade. It’s eclipsed almost entirely now by electronic trading, which the exchanges and trading firms alike tout as cheaper, more efficient, and of course, faster. These days, a click of a button—or, increasingly likely, a programmed algorithm—dictates when a trade will be executed, instead of open outcry, which was famously dramatized in the 1983 film Trading Places.
The owner of New York’s remaining commodity trading pits has said it will shutter them on Dec. 30, echoing a trend that has already taken hold in the storied pits of Chicago and London. The last of the pits, operated by CME Group at the New York Mercantile Exchange, or Nymex, were for oil and metals options trading. CME had already closed most of its commodity futures pits in New York and Chicago. (Options are the right to buy or sell a security at a certain price, while a futures contract is an obligation to do so.)
The commodity exchanges were set up to reduce risk, smooth trading and establish quality standards for commodities. Growers locked in prices in case a bumper crop sunk prices later on, and buyers stocked up at a set price in case war, hurricanes, or other disasters curtailed supplies. Speculators of course followed. Their advent was particularly important during a period of wild price swings following the US Civil War.
The exchanges were so vital that Fidel Castro stopped at the sugar exchange during his trip to New York in April 1959. (The US cut Cuban sugar imports anyway.)
The tiered-trading rings served as some of the most level playing fields on Wall Street. Tough-talking, street-smart traders and brokers from New York’s outer boroughs traded with and alongside Ivy League-educated counterparts.
Trader James Gallo had planned on studying literature at college. But everything changed in the summer of 1982 when the then-17-year-old from Bensonhurst, Brooklyn, got a job from his uncle running orders in the copper futures pit.
Gallo immediately fell in love with the camaraderie, the adrenaline, and hijinks of the rough-and-tumble exchange floor.
“I was hooked,” said Gallo, who wears a badge etched with the name T-U-L-L, his choice as a Jethro Tull fan. He has seen fellow traders make bets they couldn’t afford to lose and play in markets they knew little about. Gallo credits his own conservatism—”I was Steady Eddie”—on the floor for his career longevity and his stable income, which helped him buy a four-bedroom house in New Jersey.
Two high-profile veterans of the commodities pits have been recruited to work in Donald Trump’s administration. The US president-elect picked Gary Cohn, who moved from the trading floor to the executive ranks at Goldman Sachs, to serve as chair of the National Economic Council; Vincent Viola, who was a gasoline trader in New York and later founded high-frequency trading firm Virtu Financial, has been selected to serve as Army secretary.
As for Gallo, he’s moved on to trading electronically, which he says he’ll continue to do as a portfolio manager once the floor closes on Friday. For every James Gallo, though, there have been dozens of other traders who haven’t been able to adjust, in part because many of the skills most prized in the pit—where sharp elbows and loud voices often ruled the day—don’t translate well to a resume.