The term open outcry refers to a form of securities trading in which buyers and sellers communicate directly with each other vocally or using gestures or signals.
Open outcry is used as a form of communication on the trading floors of securities exchanges by brokers who execute trades on behalf of clients.
This system has its roots in auctions on which assets are sold to the highest bidder. As stock exchanges and trade volumes grew, open outcry systems became more complex. Large securities and commodity exchanges developed systems involving color codes and specific gestures which increased the speed with which transactions could be executed.
After the adoption of electronic trading systems by many exchanges, open outcry trading continued to be widely used in certain markets which were not well-suited to electronic trading – such as options and futures markets. Open outcry lost in significance as electronic trade-execution systems developed and direct communication with exchanges by brokers via extranets and the Internet was adopted.
A dwindling number of exchanges continue to use open outcry as the primary means of trading, while others offer open outcry trading floors to brokers for specialized transactions. However, due to the limited speed with which trades can be transacted in relation to that of electronic trading systems, the volume of trades transacted through open outcry is now much lower than the volume of trades which are transacted electronically.
Open outcry – known locally as à la criée – was used on all Swiss stock exchanges until 1991, when the regional stock exchanges in Bern (now the Berne Exchange), Lausanne, Neuchâtel and St. Gallen closed their open outcry trading floors.
The merger of the Zurich, Geneva and Basel stock exchanges to form the Swiss Exchange (now the SIX Swiss Exchange) triggered the development of unified electronic trading system, which entered service in 1995. The bulk of trading on the Swiss Exchange continued to be transacted via open outcry until 1996, when the exchange’s open outcry trading floor was closed and trading was moved to the electronic trading system.
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