The CBOT on Friday morning powered down for the last time its eight-year-old "Project A" order-entry and matching system, which through July this year generated only about 4.4 per cent, or 6.3 million contracts, of CBOT's 144.5 million volume.

On Sunday night, under the new alliance/cbot/eurex (a/c/e), trading in the 152-year-old CBOT's flagship contracts such as US treasury and grain futures will flicker across screens run by the two year old Swiss-German Eurex's computer platform. The shift marks the tradition-bound CBOT's latest - and some say half-hearted - attempt to cash in on electronic futures trading while still soothing a floor population fearful that machines will displace trading pits.

"It's a big step forward for the Board of Trade in that they now are using a big, robust worldwide system capable of doing massive amounts of volume," said a veteran trader and former CBOT director. "But for the floor population, there are difficult issues if the whole business changes.

When LIFFE (the London International Financial Futures and Options Exchange) closed its floor, there were difficult human interest stories." In contrast to the technology-savvy Chicago Board Options Exchange, where some 90 per cent of orders routed to the floor are matched electronically, the CBOT has dragged some old-guard members kicking and screaming to the computer terminals.

"For a long time they (CBOT members) have known that the writing was on the wall, but individually some of these guys are getting up in years, they're thinking of making their last few payments on their house in Naples, and that they'll be out of there in good stead," said Futures Industry Association, president, John Damgard.

Members of the cash-strapped, debt-burdened CBOT earlier this year approved a restructuring into two for-profit companies, one for traditional open-outcry floor trading and the other for electronic trading.

The CBOT completed the first part of that reincorporation earlier this month. That move caps the CBOT's circuitous journey into electronic trading, one that began in March 1989 when it introduced `Aurora,' its off-hours electronic replication of pit trading intended to compete with the Chicago Mercantile Exchange's Globex trading system.

"They (CBOT) were not on the cutting edge with Project A. They saw their competition as the Merc," Damgard added. "They saw Globex as the enemy." Aurora evolved into the first Project A, a local-area network begun in late 1992 for after-hours trading in low-volume CBOT contracts such as scrap steel and barge freight rate futures.

At the urging of cost-conscious member firms that also wanted common clearing of trades with the CME, the CBOT later joined the CME's Globex venture. But it dropped out in 1994 after feuding with CME leaders over Project A access rights.

"It's too bad that resources didn't get pooled so Chicago could remain the center of exchange-traded derivatives," added Damgard. "The cultures were just too separate." The CBOT then recast Project A, adding its thriving financial contracts to the system and expanding to overnight and afternoon hours.

In late autumn 1998 it implemented concurrent electronic and pit trading in Treasury futures. Several issues have dogged the CBOT's move to the a/c/e, however, including whether a six-hour downtime gap in its a/c/e hours will give rivals chance to grab a bigger share of the CBOT's Treasury futures business.

Initially, CBOT financial futures will trade on a/c/e from 10:00 pm CDT until 4:00 pm CDT the following day (0300-2100 GMT), encompassing CBOT pit trading hours. On Thursday, the two year-old Cantor Exchange and the New York Board of Trade said they will extend electronic trading in US treasury and agency futures to 23 hours from the current 15 hours daily, starting next week, to capitalize on the a/c/e gap.

The Cantor Exchange is operated by ESpeed Inc, the electronic trading arm of broker-dealer Cantor Fitzgerald. In mid-June another rival, BrokerTec, a privately held company conceived by some of the world's biggest banks, said it had filed to open BrokerTec Futures Exchange LLC to electronically list T-bond and note futures.

Costs remain a perennial issue, with some fees for a/c/e traders more than double Project A fees. For instance, many CBOT members currently pay 20 cents per round-turn contract to trade Project A financial and stock index products, plus standard CBOT fees.

On a/c/e, that cost will be 50 cents per round-turn contract. Electronic fees are also more expensive than floor-trading fees. But the biggest question is whether the CBOT eventually will go the way of the LIFFE, which in late 1999 shut down its financial trading pits and moved those products to its electronic venue after the Eurex quickly sucked the life out of LIFFE's biggest contract, German Bund futures.

"We're going to see the volume, at least in the financials, migrate over to electronics," said Richard Sandor, chairman and chief executive officer of Environmental Financial Products and a pioneer of financial futures trading."It will go slowly at the start," he added. "If it goes quickly at the start then it will spell the demise the floors more quickly. By the end of 2001 we're going to see the financials trade electronically."