I was fortunate enough to see a screening of the movie “Floored” earlier this month (I have included the trailer at the end of this post). It’s a documentary put together by former Chicago floor traders, about Chicago floor traders, in particular how the introduction of electronic trading has changed the entire industry.
Director James Allen Smith skillfully avoids taking a stance in the series of interviews. As a former floor trader himself, he wants to make sure that the documentary captures the dizzying highs and painful lows of The Pit as it were, and make sure that its legacy lives on.
The Documentary Itself
I have no real complaints with the documentary itself, except to say that it felt a little formulaic at times. The music, the interviews, the flow and the scenes were very skillfully put together, without a doubt.
For someone like me who only knows electronic trading it was definitely interesting to see how it used to be done, with real footage, and get an insight into the lives of the floor traders themselves. As someone of the IT Age, seeing the former tough-guy floor traders losing out to the geeky programmers and quants is quite satisfying, yet somewhat embarrassing.
To put this film in the same category as Wall Street or Boiler Room might be a bit of a stretch, but definitely among people in the industry, including those who work with traders today, this documentary is a must see. If for nothing else then the interview with a very drunk Greg Riba, a former Chicago floor trader who apparently left during the 90s under somewhat mysterious circumstances (and he makes it very clear that he doesn’t want to talk about it in the documentary).
These Poor Chaps?
As I mentioned, a large focus of the documentary is about the introduction of electronic trading in 1997, and its effect on the individuals who used to be responsible for providing liquidity in the market (while skimming some cream off the top for themselves).
It was interesting to listen to the heart-wrenching stories of some of the former floor traders. One guy lost everything due to the introduction of electronic trading. Others tried their hand and electronic trading, with mixed results. Yet other refused to give up trading the floor. But at the end of the day there is no doubt in my mind that the introduction of electronic trading has benefited the market more than it has hurt it.
The benefits are many – for starters, the end investor is getting screwed less on the spread than ever before in history thanks largely to high frequency traders and market makers. Prices are updated almost instantaneously in real time across all players in the market, which is another win for investors. And there can be no doubting the benefits of anonymity, reduction in errors, and reduced market impact.
The nerds have had their revenge, but Floored ensures that the legacy of the jocks of the trading floor will never be forgotten.