Connect switch to revive Liffe

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LIFFE, London's futures exchange, is planning to split itself in two in an attempt to exploit the potential of its electronic trading system, Connect.

Brian Williamson, Liffe's chairman, will announce on Wednesday a plan to create a separate technology company. Mr Williamson is eager to make Connect available to groups involved in business-to-business e-commerce, who have expressed an interest in its technology.

In parallel, Liffe will continue to perform its traditional function as a marketplace for customers needing to buy and sell derivative products.

The plan reflects the increasingly commercial stance that Liffe has assumed since Mr Williamson's return, in 1998, to the business he founded in the 1980s. His introduction of Connect's electronic screens has hastened the closure of the pits where traders dressed in multi-coloured jackets dealt face-to-face.

Mr Williamson has also simplified the share structure to separate the ownership of the exchange from the right to trade there.

The innovations are part of Liffe's long-term plan to float the exchange, although a move to the stock market is not expected to follow for at least a year. It has also begun reporting its results every six months, another development that has brought it into line with the habits of quoted companies.

The London Stock Exchange is heading in a similar direction after its members last week voted in favour of demutualisation.

Mr Williamson's success in transforming Liffe from a physical exchange into a versatile technology company has vindicated his controversial decision to bring an end to the era of open outcry trading.

When the pits began to close last autumn, Mr Williamson was criticised for destroying the livelihoods of its "local" traders. Doubts were raised about the ability of Connect to handle periods of heavy trading but the electronic system has proved equal to the task.