Ever since I moved across the street from the Nymex, I've been wanting a peek inside. Few lights come on, day or night. Few people go in or out. A handful of bicycles are parked outside. A security guard will tell you that yes, the trading floor is still open, and that yes, a visitor's gallery exists -- but no visitors are allowed.
Nymex is the world's largest exchange for the trading of physical commodities -- gold, silver, oil. And this is boomtime for commodities. Why is Nymex so dead? Of course trading is mostly electronic now -- but what kind of busines would let a 16-floor building remain vacant? Why no visitors -- too embarrassing?
I trade futures once in awhile, and I'm on the mailing list of the Chicago Mercantile Exchange, which bought Nymex for $9.5 billion last year. A few days ago, an invitation to the annual Nymex Foundation benefit came across my screen. My ticket to the floor.
I show up, pass two security scans and go up two escalators to the floor. Guards are posted all around. Catered food is arranged in several trading pits; a couple of open bars are open for business. An artist had just begun a painting of the floor. I walk around searching for signs of life. Here is what I see:
License plate: "2bigtofail"
Handwritten sign: "Go Home Flat Stupid."
Bottles of sanitizer, ubiquitous.
Seat cushions. trading jackets thrown over the backs of chairs.
Baby pictures. Cartoons with trader mug shots pasted on.
Old-fashioned heavy black wall phones with color-coded stickers.
The floor is cold. No money wasted on heat. The walls and furniture are dollar-bill green.
The place looks like the options floor in Chicago. Prices, too small to read, in LED lights on boards placed high above the floor. An idiosyncratic layout. Some round pits; some semicircular pits. Work stations on raised platforms. Some double-deck platforms.
Traders began to filter in. Big, bluff, tall men. Women in spike-heeled boots. Snatches of conversation: "Back in the eighties..." "He did well in commodities, so he decided to do something else. You could make a lot in telecom."
Liz Layman of Fox starts the charity auction. The Foundation has raised $22 million in 20 years for children, including $1.6 million last year.
Dinner for four at Rao's, starting bid of $4,000, sold for $5,500.
A Duxiana king-size bed starts at $10,000. No bids. The auctioneer lowers the starting price to $7,000. Still no bids.
I ask questions. Some 2,200 people used to hang their hats at the exchange; now it's more like 500. Most trade in options, supposedly because they are too complicated to trade electronically. I check the CME's Web site; an options seat on Comex sells for $15,000, up from $5,000 in January.
I wander through the building, unhindered. I find a second trading floor upstairs on the seventh floor, larger than the first. I count 14 pits. Half of the stations are obviously vacant. An ICE sign hangs over the floor. Kiosks are labeled Coffee, Sugar, Cocoa, Indexes and FX.
A janitor takes me in the elevator to the penthouse but I turn back at the sight of bare concrete walls and metal pipes. A female guard goes on in; I suspect a pleasant hidden eyrie.
2 comments:
My heart bleeds for the cultural shift. Back in the day, the exchanges were just like a giant street hustle..better than that because, except for outtrades, you knew you'd get paid. Pit guys might be considered low class in the minds of the guys upstairs, but average ones were much better than the best upstairs guys and were subject to resentment that carries on to this day. To me, there's nothing more exciting that just at the open or closer, all the yelling, jabbing, and thrusting. Pure combat, but mostly legal.
An interesting post.
If half of the things my friend SW said were going on at the old Nymex were true, then I am glad that pit trading is being replaced by more auditable and dependable electronic trading. Customer complaints should decrease greatly.
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