After a long history of futures and options open outcry trading, the Minneapolis Grain Exchange is closing its trading pits effective Dec. 19, 2008. The decision to make the transition to exclusively electronic trading was unanimously approved by the MGEX board of directors and is pending MGEX ownership approval.

The exchange’s electronic trading operations on the CME Globex electronic trading platform will remain unchanged. MGEX will continue to host the cash market from a newly remodeled location in the historic Grain Exchange Building. This space will include a new member lounge as well as desk space for electronic trade execution.

This decision comes after a study by MGEX management at the request of the board of directors. Over the past 12 months there has been a dramatic trend away from open outcry and towards electronic trading witnessed by all U.S. exchanges, including MGEX.

In a news release, MGEX said it will “work closely with all members of the trading floor community to ensure an effective transition for all affected parties. The exchange will implement a fee waiver program for floor traders who trade for their own account. In addition, a liquidity provider program and market maker program are being introduced. These initiatives are designed to help facilitate the change in venues and build market participation.”

“The board of directors is acting in accordance with its fiduciary responsibility to MGEX members,” said Scott A. Cordes, chairman, MGEX board of directors. “While we will regret to see the end of open outcry trading in Minneapolis, the new fee programs provide an opportunity for global growth in our hard red spring wheat contract.”

During the transition period to exclusively electronic trading, MGEX will waive all fees associated with open outcry transactions for floor traders initiating trades on their own behalf from Nov. 1 through Dec. 19.

Additionally, exchange fees for electronic trading permit (ETP) holders will be waived Nov. 1 through Jan. 31, 2009, as further incentive to use MGEX markets.

“The trading community is successfully migrating to the electronic platform and we are focused on providing greater MGEX operating efficiencies for our member owners,” said Mark G. Bagan, president and CEO, MGEX. “The exchange is establishing our position in the derivatives industry while ensuring preservation of our internationally respected cash market.”