THE London International Financial Futures and Options Exchange (Liffe) will bring forward the introduction of electronic trading by six months in order to reclaim business lost to Frankfurt, writes Andrew Wilson.
It proposes that the new system, which Liffe is developing, will be brought into use by the second quarter of next year but it is still committed to increasing its open-outcry system of dealing. This is one of the few remaining in London and is typified by the garish uniforms of the floor dealers.
The electronic system will be based upon that which Liffe is already putting into place for dealing in equity derivatives.
Liffe has been under pressure ever since the Deutsche Terminborse managed to overtake Liffe in dealing in the 10-year German government bond futures.
It has responded by a #44m reduction in spending for the year and the elimination of 130 jobs.
However, yesterday it went further and said that it has postponed a decision to move into the #50m proposed new trading floor in London's Spitalfields until later this year.
There will also be a major shake-up in the structure of Liffe with a determination to become profitable and pay dividends to shareholders who may in future not need to be Liffe members.
It is expecting that daily turnover will decline from the 880,000 contracts forecast for 1998 to 650,000 next year but for a recovery to 1.2 million by 2002.
There will be an extraordinary meeting of members on June 9 to approve the proposals.
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