Liffe faces revolt
Local dealers fight exchange's move to screen-based trading
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.
- 1 Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
- 3 World learns of app that shows you who unfriended you on Facebook, app promptly crashes
- 4 Chris Moyles reportedly set to make radio comeback with new breakfast show on XFM
- 5 The Greece debt crisis explained in less than 100 words
Florida man sentenced to two-and-a-half years for having sex on the beach in front of a child
Autistic teenager beaten up by bullies makes them watch 20-minute video about autism
Tube strike July 2015: Is it still on? Everything you need to know about the industrial action
Eiji Tsuburaya: Godzilla co-creator honoured in today's interactive Google Doodle
Florida teacher sentenced to 22 years in prison for sexually abusing three pupils
More Britons believe that multiculturalism makes the country worse - not better, says poll
Osborne to cap family benefits at £23,000 – announced ahead of his post-election Budget
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
Sickness and disability benefits could be reduced by £30 a week as part of £12bn welfare cuts
iJobs Money & Business
£40000 - £95000 per annum: Recruitment Genius: This is an exciting opportunity...
competitive: SThree: Are you passionate about sales?Do you have a keen interes...
£17000 - £30000 per annum: Recruitment Genius: This is an exciting opportunity...
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...