No More Paper

Certain things for certain places leave an impression on you. For me, there is one thing from my time spent on the trading floor at the Chicago Mercantile Exchange from 1985–1992, that will never escape my mind: the paper.

In other words, the tremendous of amount of excess paper that covered the trading floor by day's end. In fact, one could not walk from the pit to a booth or to an exit without swashbuckling through piles of paper — sometimes more than an ankle deep.

There were a few different reasons for the mass heap of paper scattered on the floor, with the majority just on the perimeter of the trading pits. Back in those days, all orders that were outside the current price (limit buy and sells, buy stops and sell stops) were actually written on paper. These orders had duplicates and even triplicates for compliance reasons. This did not include a copy of the order that was time-stamped and kept at the trading desk that it originated from.

Once the order was executed in the pit, the clerk kept a copy for the filling broker, and the original order was sent back to clearing from that it originated from. Often leaving one to two extra copies of the order. You can guess where that ended up.

Another reason for the paper mess was that traders in the pit executed and tracked their trades on trading cards that also had duplicates and or triplicates. Once the trade-checker (confirmed side, trade price and time) he or she turned in the original card, kept one copy. You can guess where the extra copied ended.

Adding to the heap were the discarded trade sheets that each trader or broker's clerk received the following day to ensure that all trades from the following day matched up with the opposite party. One can imagine how many large sheets of paper needed to properly clear the thousands of trades executed the previous day.

Add on the candy and gum wrappers, discarded newspapers (remember those), the thousands of cards used by trading pit clerks to keep track of orders in the pit or to fling a friend or foe or even an innocent visitor to the floor and one can maybe glimpse a bit of the paper mess.

So, what jogs my memory to mention the litter from the trading floor, my recent visit to New York Stock Exchange trading floor. Earlier this week, I attended the Second Annual Benzinga Fintech Awards in New York. During my visit, I was able to tour the trading floor with one of our guests from Benzinga's PreMarket Prep Show, Tim Anderson of TJM Investments.

Besides it being much smaller than when I visited the NYSE floor in the 1990s and littered with television production sets as opposed to trading posts, I left enamored with its cleanliness and lack of paper everywhere.

Along these lines, trading cards and clearing sheets are no longer needed since trades can be entered on handhelds and automatically enters the clearing system for clarification purposes Instead of finding out an error the following day, the miscommunication can be rectified in minutes.

Upon further review, I should not have been all the surprised. After all, we live in the digital age.

There is no longer the need for paper orders with duplicates and triplicates copies when everything can be transmitted electronically. Whether it be a messaging system of some type than can relay an order from a customer to a desk to a broker or even sent to a broker directly. The messaging system of choice accurately time stamps for compliance reasons, thus eliminating the need for paper orders.

In closing, one thing is for certain, the lack of paper and or paper mess did not detract from the special atmosphere on being back on a trading floor.