Outlook: Why Liffe should see off this challenge

London's pre-eminent position in futures and options trading has long been the object of jealous regard by both Frankfurt and Paris. This is more than just a commercial thing. It is also about ancient rivalries, and, most important of all, alarm that the City could continue to be the dominant financial centre in a Europe united by a common currency Britain may never be a part of.

So far, however, neither Paris nor Frankfurt has come anywhere near rivalling Liffe, which even manages to beat them on their own ground with locally denominated derivative instruments. Unequal to the task on their own, the two are now proposing to gang together in their attempt to trounce London's testosterone-fuelled barrow boys in stripey jackets. Might they succeed?

They've tried once before and failed and while the latest attempt to pool contracts and resources looks a more serious stab at the exercise, there's no reason to believe they will fare any better this time round. For starters, the two have adopted radically different approaches to futures trading. Paris has copied the open outcry method of eyeball-to-eyeball trading used in London and by the Chicago Board of Trade. Frankfurt is a high-tech, screen-based trading system.

While it is true that the two methods coexist perfectly happily both in London and Chicago, that is only because screen trading is so obviously only a little-used back-up to the action in the pit. The two cultures will not merge easily without one subsuming the other. Paris and Frankfurt may be united in their hatred of London but their hatred of each other is equally powerful.

Even assuming the alliance works, they still have a huge catching-up exercise to do. The Deutsche Boerse and Matif combined are still streets behind Liffe in terms of critical mass. Chuck in Simex, the Far Eastern futures exchange, for good measure, and they still wouldn't come close.

But there is also a more fundamental reason to believe Liffe will maintain its lead. The City is in essence an offshore centre not dependent on the fortunes of the UK economy. No other financial centre in the world is quite like it. It is this, more than anything else, that lies behind Liffe's phenomenal growth. Other financial centres, even the great ones of New York and Tokyo, exist mainly to service their own domestic economies. That is not true of the City which is genuinely international in the way it operates and trades.

It would be dangerous for Liffe to be complacent, but nor do the bellicose noises from Paris and Frankfurt seem for the time being like anything more than hot air.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
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: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

As in 1942, Germany must show restraint over Greece

As in 1942, Germany must show restraint over Greece

Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
Britain's widening poverty gap should be causing outrage at the start of the election campaign

The short stroll that should be our walk of shame

Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

Homeless Veterans appeal

The rise of the working poor: when having a job cannot prevent poverty
Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

Prince Charles the saviour of the nation?

A new book highlights concerns about how political he will be when he eventually becomes king
How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

How books can defeat Isis

Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
Judith Hackitt: The myths of elf 'n' safety

Judith Hackitt: The myths of elf 'n' safety

She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
The open loathing between Barack Obama and Benjamin Netanyahu just got worse

The open loathing between Obama and Netanyahu just got worse

The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
French chefs get 'le huff' as nation slips down global cuisine rankings

French chefs get 'le huff' as nation slips down global cuisine rankings

Fury at British best restaurants survey sees French magazine produce a rival list
Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

Young carers to make dance debut

What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

Design Council's 70th anniversary

Four of the most intriguing prototypes from Ones to Watch
Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

Dame Harriet Walter interview

The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
Art should not be a slave to the ideas driving it

Art should not be a slave to the ideas driving it

Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
Bill Granger recipes: Our chef's winter salads will make you feel energised through February

Bill Granger's winter salads

Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
England vs Wales: Cool head George Ford ready to put out dragon fire

George Ford: Cool head ready to put out dragon fire

No 10’s calmness under pressure will be key for England in Cardiff
Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

Michael Calvin's Last Word

Time for Old Firm to put aside bigotry and forge new links