Liffe in rush to online trading

LIFFE is expected to announce that it is speeding up its shift from pit trading - where men in brightly coloured jackets flap hand signals at one another - to online screen trading popular with investors seeking transparency and cheap dealing costs, according to City sources.

The announcement, due after Liffe's board meeting on Wednesday, will extend the Exchange's commitment to begin trading UK equity options on screen from 30 November.

A shift of a second batch of futures and options contracts to Liffe's on-screen system is scheduled for the second quarter of 1999, but at least part of this second batch will now be brought forward, the sources say.

Liffe's move was prompted by its thrashing at the hands of the Frankfurt- based Deutsche Terminborse in the battle to be Europe's dominant derivatives market. By this summer, the DTB was so successful that an empty space appeared in the middle where the bund pit used to operate.

Last month Liffe elected Brian Williamson, who built up the Exchange in the 1980s, as its chairman for the second time. He quickly put together a Fast Progress Group, composed of four insiders and four outsiders, led by Lloyds TSB chairman Sir Brian Pitman, to undertake a review of Exchange strategy.

"We think moving UK equity options to our Connect computer system is going to be a great success," said Liffe equity automation senior associate Nick Bramley.

The move to online trading of derivatives contracts, allowing investors to speculate on, and hedge against, future movements in financial markets, has been long been held up by the Exchange's locals.

Locals are individuals backed by private capital trading for their own accounts. They are often pitted against the Exchange's institutional members. They make their profits by observing the flow of funds at the institutional level and positioning themselves ahead of this flow. The locals says this brings needed liquidity to Liffe. But the Exchange's big customers reply that it jacks up dealing costs, while making it difficult to get a handle on firm prices until after bargains have been struck.

Taking advantage of the discontent of institutional customers, futures and options exchanges in Amsterdam and Stockholm as well Frankfurt have wooed away increasing slices of business from London. The DTB, which is closely tied to Germany's stock exchange, linked up with the Swiss derivatives exchange to create Eurex and sought out further mergers.

Mr Williamson's strategy in seeing off this challenge is to go back to basics and ask customers trading futures and options contracts worldwide what they want from London. Two ideas appear to be crystallising.

The first is a merger of Liffe with the London Clearing House, which settles the contracts traded on many of London's exchanges. This would help position Liffe for the brave new world of electronic trading, in which investors could deal from anywhere in the world.

The second idea is to put Liffe more at the centre of over-the-counter futures and options trading.

"You could well see major announcements in both these areas," said a source at Liffe.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
News
Details of the self-cleaning coating were published last night in the journal Science
science
News
Approved Food sell products past their sell-by dates at discounted prices
i100
News
Life-changing: Simone de Beauvoir in 1947, two years before she wrote 'The Second Sex', credited as the starting point of second wave feminism
peopleHer seminal feminist polemic, The Second Sex, has been published in short-form to mark International Women's Day
News
i100
Arts and Entertainment
The beat is on: Alfred Doda, Gjevat Kelmendi and Orli Shuka in ‘Hyena’
filmReview: Hyena takes corruption and sleaziness to a truly epic level
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Guru Careers: Executive Assistant / PA

£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...

Ashdown Group: Graduate Application Support Analyst

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Reach Volunteering: External Finance Trustee Needed!

Voluntary post, reasonable expenses reimbursed: Reach Volunteering: Would you ...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable