Liffe faces revolt

Local dealers fight exchange's move to screen-based trading

THE COMPLETION of Liffe's electronic revolution is under threat from the exchange's "local" dealers, who feel victimised by the introduction of Connect, the new screen-based trading system.

Locals, who uniquely trade the exchange's derivative products with their own money, say that the exchange has offered them free use of the new screens. They claim the offer of free software, hardware and exemption from transaction charges is motivated by Liffe's concern that the new system will fail. Liffe denies having made any such offer.

Two large UK banks, thought to be Halifax and NatWest, are said to be backing the locals in their drive to preserve the open-outcry pits, which have characterised the exchange through- out its 17-year existence.

The Euribor and short sterling markets, which enable participants to bet on the direction of European and UK interest rates, are next month due to convert to Connect. The move is expected to bring to an end open- outcry trading, where deals are executed by traders standing side-by-side in "pits".

Liffe has already switched most of its other contracts to Connect, but experts predict that the transfer of Euribor and short sterling will prove more troublesome.

The locals say that Liffe has offered them an olive branch out of concern that its business will dry up should they decide to give up. Some say they have been summoned to meetings where the exchange's management has expressed its eagerness for them to continue trading after the conversion to Connect.

However, Liffe's charm offensive has failed to assuage the bitterness felt on the exchange's floor at the way the transfer to Connect has been handled.

One local said: "Liffe has not consulted us at all about this so it is a bit strange that they have suddenly become concerned about us."

Having lost the vast majority of the German government bond futures market to Eurex, the automated German ex-change, Liffe is desperate to retain its dominance of the Euribor market to preserve its reputation as a global player. However, some of the banks who make up Liffe's customer base have argued that complex short-term interest rate products like Euribor and short sterling are best-suited to trading on open-outcry. They point out that Eurex's electronic screens have only managed to capture about 12 per cent of the Euribor market, even though the service is free.

Trading in both short sterling and Euribor will operate in tandem in the pits and on screens until at least March. Although Liffe has said that it will let the market determine which platform it prefers, locals claim that the exchange is set on closing the pits and transferring all its business to the screens. They are so incensed by this alleged intransigence that they are planning to hold a protest in the near future by boycotting the exchange for a day.

There is also concern that unlike pit traders, screen-based dealers do not need to be registered with a regulator. This has led to fears that the screens do not provide adequate security against rogue traders like Stephen Humphries, from Sussex Futures, who recently lost pounds 750,000 on unauthorised deals in the UK government bond futures market.

Start your day with The Independent, sign up for daily news emails
ebooksNow available in paperback
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Sheridan Maine: Commercial Finance Manager

Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Sheridan Maine: Regulatory Reporting Accountant

Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...

Ashdown Group: Marketing Services Manager - (communications, testing, DM)

£32000 - £35000 per annum + benefits: Ashdown Group: Marketing Services Manage...

Guru Careers: Finance Account Manager

£Neg. (DOE) + Excellent Benefits: Guru Careers: A Finance Account Manager with...

Day In a Page

Homeless Veterans appeal: 'You look for someone who's an inspiration and try to be like them'

Homeless Veterans appeal

In 2010, Sgt Gary Jamieson stepped on an IED in Afghanistan and lost his legs and an arm. He reveals what, and who, helped him to make a remarkable recovery
Could cannabis oil reverse the effects of cancer?

Could cannabis oil reverse effects of cancer?

As a film following six patients receiving the controversial treatment is released, Kate Hilpern uncovers a very slippery issue
The Interview movie review: You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here

The Interview movie review

You can't see Seth Rogen and James Franco's Kim Jong Un assassination film, but you can read about it here
Serial mania has propelled podcasts into the cultural mainstream

How podcasts became mainstream

People have consumed gripping armchair investigation Serial with a relish typically reserved for box-set binges
Jesus Christ has become an unlikely pin-up for hipster marketing companies

Jesus Christ has become an unlikely pin-up

Kevin Lee Light, aka "Jesus", is the newest client of creative agency Mother while rival agency Anomaly has launched Sexy Jesus, depicting the Messiah in a series of Athena-style poses
Rosetta space mission voted most important scientific breakthrough of 2014

A memorable year for science – if not for mice

The most important scientific breakthroughs of 2014
Christmas cocktails to make you merry: From eggnog to Brown Betty and Rum Bumpo

Christmas cocktails to make you merry

Mulled wine is an essential seasonal treat. But now drinkers are rediscovering other traditional festive tipples. Angela Clutton raises a glass to Christmas cocktails
5 best activity trackers

Fitness technology: 5 best activity trackers

Up the ante in your regimen and change the habits of a lifetime with this wearable tech
Paul Scholes column: It's a little-known fact, but I have played one of the seven dwarves

Paul Scholes column

It's a little-known fact, but I have played one of the seven dwarves
Fifa's travelling circus once again steals limelight from real stars

Fifa's travelling circus once again steals limelight from real stars

Club World Cup kicked into the long grass by the continued farce surrounding Blatter, Garcia, Russia and Qatar
Frank Warren column: 2014 – boxing is back and winning new fans

Frank Warren: Boxing is back and winning new fans

2014 proves it's now one of sport's biggest hitters again
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas