In the futures market, contracts are traded “side by side”, both electronically and in the open-outcry exchange pits. Today, 80% of all futures trading is electronic.

1. Electronic trading has played an important role in the functioning of the fast-paced financial markets for many years. Its use in the financial services industry was extensive long before the dot.com era and the adoption of e-commerce by other industries.
2. In open outcry, traders cry out bids and offers to each other on a trading floor. But even with open outcry, the prices and volumes of trades are entered into electronic systems for distribution to the wider markets.

Electronic trading has played an important role in the functioning of the fast-paced financial markets for many years. Its use in the financial services industry was extensive long before the dot.com era and the adoption of e-commerce by other industries.

Although open outcry is still used, mainly in futures exchanges, most trading in financial markets is conducted electronically. In open outcry, traders cry out bids and offers to each other on a trading floor. But even with open outcry, the prices and volumes of trades are entered into electronic systems for distribution to the wider markets.

In the financial markets, where instrument prices can change second by second, participants need news, real-time market data and powerful analysis tools. They also require secure, reliable electronic trading systems that provide immediate access to liquidity and enable them to deal quickly and easily.

And because traders need to follow the markets as they deal, they want access from a single platform to market news and data, information on trading opportunities, and electronic trading systems.

Electronic trading systems are tailored to suit the different needs and conventions of the different financial markets. Electronic conversational trading allows users to communicate and trade with known counterparties. Electronic matching enables users to match bids and offers anonymously.

Electronic order routing and order management systems give traders the ability to generate, route and track orders automatically and to direct orders to multiple brokers, exchanges and markets.

The widespread adoption of internet technologies has enabled financial institutions to extend costeffective electronic trading facilities beyond their central dealing rooms to internal departments, branches and beyond the enterprise to their customers.
 

Electronic trading and processing tools have enabled financial institutions to streamline their operations across the enterprise from initial deal capture and position keeping in the trading room, to risk management and settlement procedures in the middle and back offices. End-to-end processing is vital to increased efficiency.
Reuters has a long history of helping trading communities in the financial markets operate effectively.

It pioneered an electronic trading system for the foreign exchange and money markets in the 1980s, creating an electronic marketplace with greater transparency and liquidity. Today, Reuters also provides electronic trading products for traders in the other financial markets and solutions for banks wishing to build electronic sales channels.

History of Electronic Trading at CME Group

After five years of planning, negotiation and development, the CME ® Globex ® electronic trading platform launched on June 25, 1992. Based on Reuters' technology, CME Globex terminals were originally hard-wired to Reuters' global network anchored to a mainframe in Long Island, New York.

With trading from Chicago, New York, Paris and London, CME Globex truly became a global electronic marketplace.

On its first day of trading 2,063 CME Deutsche mark and CME Japanese yen futures and options on futures were traded through the platform. The CME British pound, CME Swiss franc and CME Australian and CME Canadian dollar futures were added to the CME Globex platform in July 1992, with the benchmark three-month CME Eurodollar futures and options on futures contracts joining them one month later. CME Equity products made their debut on the electronic trading platform in September 1993, when CME launched the benchmark CME S&P 500 ® futures and options on futures contracts.

Ten years later, with new contracts and the second generation of the CME Globex platform implemented, utilizing the NSC trading system, the October 2002 average daily volume reached 1.2 million contracts. Throughout its history, the CME Globex platform has hit a number of significant milestones as it continues on its solid path of successful electronic trading.

Today, over 80% of the daily volume on CME Group is traded electronically.

Courtesy of Reuters

Diagram: Consolidated CME-CBOT Trading Floors