In the world of trade, the term “floor” is usually taken as the shortened version of trading floor. A trading floor is an area in which transactions are made among several participating entities. This is a venue where actual trading action takes place, as opposed to conducting transactions over-the-counter. Trading floors are usually located in the same building as the stock exchange of a specific city or financial area. Since the conduct of trade usually carries much action, urgency, and stress with it, trading floors are often referred to as “pits.” Perhaps such a term also comes from the physical appearance of such locations, since there are usually elevated areas around the main trading floors from which observers may stand.
In the past, trading floors used to be the center of most of the trading activities in exchanges all over the world. However, the past years have brought about a lot of technological advancements which now allow entities interested in trading to carry out their activities electronically. Electronic trading platforms were specifically created for this purpose, and thus serve as virtual pits. This advancement has made the conduct of trade more convenient for investors and brokers. As such, the traditional trading floors, while still in existence, are not as popular as they used to be.
For other financial institutions, trading floors may not be exactly the same as they appear in stock exchanges, but they are similar in the sense that they serve as venues where trade takes place, even though these transactions may use electronic media.
