Pit

A pit refers to the physical, octagonal or polygonal sunken trading area on a traditional exchange floor where open-outcry trading took place — brokers and traders would stand inside the pit, using hand signals and verbal bids to buy and sell futures and options contracts. The Chicago Mercantile Exchange (CME) and Chicago Board of Trade (CBOT) were historically famous for their commodity and financial futures pits. While electronic trading has almost entirely replaced open-outcry in global markets, pit trading left a lasting legacy — many derivatives trading conventions, including hand signals and the role of market makers, originated in the pit environment. In India, NSE's fully electronic system made physical pits obsolete from inception.