They're keeping the facade and gutting everything behind it.
I walked past 400 South LaSalle over the weekend, our old stomping grounds, and stood there looking at a building I used to walk into every day. The front of it is staying up. The inside is going to be condos, I think.
That room was the largest trading floor in the world when it opened, and most people trading options today have no idea it was ever there.
I brought it up on the show this morning. Tim had a stronger reaction to it than I did, and we ended up on the subject for most of a segment.
The building went up in 1984.
Six stories of red granite at LaSalle and Van Buren, designed by Skidmore Owings and Merrill, and they built the whole thing around one room.
Forty thousand square feet of trading floor. Twice the size of the one over at the Board of Trade, and when it opened it was reported to be the biggest in the world.
Almost no windows in the place, which people always thought was odd. Nobody was in there to look outside. They needed forty thousand uninterrupted square feet so several thousand people could stand in it and shout at each other all day.
Standing in front of it reminded me a lot of when they tore down my childhood home. It had that feeling.
Tim said he nearly shed a tear, that his stomach dropped when he saw it.
Then he told everybody watching to think about where they first worked. First job, even if it wasn't a good one. He said some of the best memories of his working career are on that floor in that building, going in every day.
He was a kid in college the first time he got taken down to an exchange. They walk you onto the floor and you stand there watching people trade like Trading Places with Eddie Murphy, which is exactly what it looked like and exactly what it sounded like.
Cboe has been out of that building for years. Corporate went to the Old Post Office and open outcry moved a couple of blocks north into the Board of Trade in 2022, seventh and eighth floors, another forty-some thousand square feet.
Back in March that floor traded 2.2 million contracts a day, the most it has ever done, and SPX open outcry set its own record at 937,000.
Those are record numbers, so go count the people who produced them. The population up there is around 300, and that figure includes floor brokers and trading firm employees, not just market makers, against the thousands who filled the old room in the 1990s.
Think about that for a second.
It goes past the floor too, because options market making had something like 60 firms at its peak and maybe five matter now, after the business stopped being profitable enough to support everybody.
The volume is also concentrated in a way the headline hides.
Roughly a third of SPX and close to 45% of VIX options get done in those pits, while everything else up there is small by comparison.
The floor didn't shrink into a smaller version of what it was, it specialized.
The reason it survived is worth understanding even if you never set foot in a pit.
When an institution needs real size done the screen works against them, because every move gets detected and priced in before they finish, and in the pit a broker can work the order without telegraphing it.
That got proven the hard way during COVID when the pit shut down and big orders suddenly became much harder to fill quietly.
Over at CME they're down to one pit and about 75 traders in the same building, and a few floors below both of them they're putting in a museum about open outcry.
At least the floor is still in the Board of Trade. Feels a little bit more normal that way.
Your only option,
Mark Sebastian
P.S. It's been a lot of years since any of us stood on that floor. What we learned in there came with us, and we're still teaching it every day to traders who never got to see the place. If you've ever wanted to be a complete trader, Trader X is where we do that. Click here for details.