Firth swaps steel for City systems

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The Independent Online

Firth Holdings, the former steel maker, is this week expected to announce its transformation into a technology com- pany providing the latest systems for City dealing rooms.

Firth Holdings, the former steel maker, is this week expected to announce its transformation into a technology com- pany providing the latest systems for City dealing rooms.

The deal will also mark a change of direction for Prebon Yamane, the money broker injecting its electronic trading technology into the cash shell. Prebon's traditional business, acting as middle-man to facilitate multi-million pound deals between banks, will remain part of the private company. Firth will embark on a placing of shares that will be used to fund the development of its adopted business, to be called Kinetech.

The move is thought to be a result of the increasingly difficult trading conditions faced by money brokers. The advent of electronic technology in recent years has resulted in thousands of brokers losing their jobs. Money brokers have also suffered from the eagerness of banks to do deals direct rather than pay commission for dealing via intermediaries.

Arthur Hughes, the head of Prebon Yamane and its major shareholder, is thought to be keen to tap into a growing technology business rather than the declining world of voice-based money broking. The move echoes the decision of Liffe, London's futures exchange, to abandon its open-outcry trading floor and concentrate instead on its proprietary trading technology, Liffe Connect. It also follows the increasingly technological orientation of Garban-Intercapital, the world's leading money broker that has blazed a trail in implementing computerised broking methods.

Kinetech will be looking to sell its trading systems to a variety of users in the same way that Liffe has sought to find uses for its technology beyond its traditional derivatives markets.

Prebon employs about 1,500 brokers who transact $56 trillion (£37.3trn) of deals each year in its empire of 30 offices around the world.

Firth's reinvention as a cash shell is proceeding as planned with the liquidation of Spartan Redheugh, its former steel subsidiary. Firth, which is chaired by Sir Alan Thomas, a former director of PowerGen, recently had its shares suspended at 18p. Profits for the last financial year were £5.1m, of which £4.9m was accounted for by an exceptional gain.

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