Dramatic turn-around in Liffe's fortunes prompts surge in shares

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The Independent Online

Shares in Liffe, the London futures exchange, have more than doubled in value since it partially demutalised last year, reflecting the dramatic turnaround in the group's fortunes since it closed open-outcry pits and moved to screen-based trade.

The shares, which were trading at little over £2 when Liffe allowed non-members to buy for the first time last April, were traded at £5.20 yesterday, valuing the exchange at £68m.

The steep rise in the stock has accelerated sharply since the end of March when Liffe announced plans to spin-off its Connect electronic trading system in a separate company to be called Liffe.com. At the same time Liffe announced that losses had fallen to £22m from £58m. Since then shares have climbed 35 per cent.

Most of the buying appears to have come from private individuals who have been speculating on Liffe benefiting from the trend towards demutualisation and consolidation of exchanges. Liffe has been courted by both Frankfurt and Euronext, the Franco-Dutch exchanges group.

Closure of the open-outcry pits, which allowed the exchange to cut overheads by nearly £100m and slash charges, has been accompanied by a sharp rise in volumes.

The most recent trading figures put out at the start of April showed Liffe had traded contracts worth £14 trillion in the first quarter, maintaining its position as Europe's biggest exchange by value.

As part of the programme initiated by Brian Williamson, the chairman, to rebuild Liffe more than 18 months ago, Liffe shares have been available to be traded on a limited match bargain basis via Cazenove, the stockbroker.

Since then a number of freelance traders or locals have either pulled out of the market or sold shares to finance trading. At the same time, Liffe employees, who were previously barred from owning shares, have taken a stake in the company.