Liffe brings forward starting date for electronic trading

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The Independent Online
LIFFE, London's futures and options exchange, is to speed up the introduction of electronic trading. It now hopes to introduce an electronic system by the second quarter of next year, six months earlier thanplanned. The electronic system will run alongside Liffe's open outcry trading floor.

The exchange is also to allow non-members to buy shares in the exchange, a development which could eventually lead to flotation.

The proposals were contained in a long-awaited strategy document, released yesterday, designed to recapture Liffe's position as a leading exchange.

Liffe's plans, which still need to be endorsed at an extraordinary general meeting of its members on 9 June, received a mixed reception from its membership yesterday.

Many - in particular, the large American houses - were pleased to see the exchange re-iterate its committment to electronic trading, although a few felt the proposals had not gone far enough.

"The restated commitment to open outcry is a disappointment," said David Mattimoe, a prominent local and a vocal supporter of electronic trading,

Other of Liffe's "locals" - traders who speculate on the exchange with their own money - expressed disappointment with the board's move towards electronic trading, saying it could spell the end of both their livelihood and, ultimately, the exchange itself. "Open outcry is where Liffe's competitive edge lies," commented one.

Daniel Hodson, Liffe's chief executive, said: "In three months the board of the exchange has come a long way and taken some enormous steps." Liffe's management has come under heavy criticisim in recent months for its failure to embrace electronic trading earlier. Many attribute it to the rapid decline of Liffe's market share in the prestigious German government bond (Bund) futures.

Mr Hodson said the proposal to allow non-members of Liffe to buy shares in the exchange was consistent with the board's proposals, announced last month, to introduce a "for profit" objective. Until now, share ownership has been restricted to members of the exchange. Liffe's chief executive ruled out any move towards a flotation in the near future, though he said the option could not be completely disregarded in the longer term.

Mr Hodson said closer co-operation with other exchanges, perhaps even a merger, would be considered if it was felt that was in shareholders' best interests.

Liffe said Spitalfields in London's East End, was one of "several potential sites for housing the Exchange".