Pit of despair for City 'barrow boys'

It's bye-bye to "Buy! Buy! Buy!" One of London's last raucous trading pits is closing, to make way for computer dealing. Will the City ever be the same again?

A riot of colour, a cacophony of shouts, a flurry of wild gesticulation. Who said business was stuffy and dull?

Click here for an everyday guide to pit trader's sign language

The world's "open outcry" trading pits have long been the flamboyant and glamorous side of high finance. However, the onward surge of information technology is about to swallow another bastion of the City's "barrow boys".

Trouble down t'pit

The London International Financial Futures and Options Exchange (Liffe) was once abuzz with the cries of 600 pit traders. This week the final two dozen will hang up their gaudy blazers for good.

A head for figures, an eye for a deal and the right flick of the wrist were the only qualifications needed to make a splash in the Liffe's 24 pits - in which commodities ranging from cocoa to government bonds were traded.

Dr John Board, a financial markets expert from the London School of Economics, says this was not a working environment for the faint-hearted.

Work on the wild side

"These pits were aggressive places by their very nature. When you are trading against someone, their profit is your loss."

Dr Board says on the packed trading floors it paid to be physically imposing and male.

Next stop, the paperless pit

"I could tell you lots of stories about women being intimidated in the pits. But then if you were a 5ft 1in, scrawny man, I dare say you'd be intimidated too."

Although the Liffe has been in existence only since 1982, open outcry trading has its roots in the fast and furious traditions of livestock and farm produce auctions.

Traders relied on bellowed instructions and an arcane sign-language to seal a deal, recording the transactions on slips of paper.

Pit community

Though undoubtedly colourful, the pits were nothing if not labour intensive. Each trader would be backed up by a team of people taking telephone orders, and runners to bring these orders to the pits.

With the sound and fury of face-to-face trading giving way to the clicks and bytes of computer transactions, economics and computer science graduates may soon hold sway - rather than the alumni of the University of Life.

"Don't buy until you see the whites of their eyes."

Bill Smits, head of non-financials at Liffe, says many traders have quite happily given up the pits for the computer rooms.

"A good trader has a fundamental knowledge of what the business is all about and will be able to trade anywhere."

However, Dr Board says dyed-in-the-wool outcry traders might not make the transition, especially the "locals" - the individual traders who bet with their own money and are often stereotyped as brash, working-class wheeler dealers.

Eyes on the prize

"Pit trading is about your physical presence. The so-called 'barrow boys' didn't need an in-depth knowledge of the market, they could see the whites of each others' eyes and know how desperate people were to sell."

Trading in front of a screen requires different skills, he says.

"I hated those red braces. And all that shouting."

"You need a greater understanding of the market, greater intuition. The pits called for aggression and size. Those characteristics won't be necessary anymore."

Dr Board says the new breed of traders will be "more thoughtful" - a far cry from the cock-sure stereotype many came to know and loathe in the 1980s.

Liffe's move to computer trading was prompted by the need to give global access to the derivatives exchange, says Mr Smits.

Shouting the odds

However, the hue and cry of the old method may have something to be said for it.

The shouts of outcry trading may give traders valuable advanced warning of market swings, two academics from the University of Michigan Business School have suggested.

"Who wants to buy a telephone?"

The pair analysed noise levels at the 152-year-old Chicago Board of Trade - another exchange moving towards computer trading - and found shouting picked up minutes before prices began to move.

Though the value of such auditory warnings is the subject of debate, one software company, Marketsound, now offers computer traders the chance to hear a simulation of pit cries.

For those nostalgic for the old days of trader chic, donning a brightly-coloured jacket and listening to an online market commentary may not be enough.

In that case, BBC News Online has a few suggestions on how to keep the pit traders' sign language alive by using it in your everyday life.

1. Working, eg. "Honeybunny, I've told you not to drop by when I'm working."

2. Buying, eg. "Last orders! Are you buying?"

3. Half, eg. "No, I couldn't drink a whole pint."

4. Hundred, eg. "How old's the Queen Mum?"

5. March, eg. "What's that smart walking soldiers do?"

6. Ten, eg. "What's that Dudley Moore film, the one with Bo Derek on the beach?"

7. Thousand, eg. "How many cuts are there in that gruesome death?"

8. Size, eg. "Latte? Do you want that tall or grande?"

9. Zero, eg. "What's the name of that Japanese fighter plane?"

Click here to return