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By Tony Hallett, 30 November 1998 00:15

NEWS The London International Financial Futures and Options Exchange (Liffe) takes its first step towards full electronic trading (etrading) today. The derivatives exchange - which had been Europe's largest until Frankfurt's etrading-based DTB overtook it this year in the trading of key contracts - has launched Liffe Connect for Individual Equity Options. By the second quarter of next year, Liffe has promised to introduce the second phase of Liffe Connect, for futures contracts, although some traders are encouraging Liffe to try to bring forward this roll-out date. Both platforms will initially run alongside traditional 'open outcry' trading, which relies on traders verbally communicating with each other from pits at the exchange. The move to etrading caused controversy when many established floor traders complained the move would be too difficult. "Some of them [the traders] will really suffer," commented John Fison, MD of Keltec Progress, a reseller which serves a number of financial institutions in the City, including the London arm of the DTB. After a move towards an electronic platform gained the near unanimous support of Liffe members earlier this year, the exchange moved quickly, rejecting claims that it would be more convenient and cheaper to buy a version of the DTB system, or the electronic version of France's Matif. Commenting recently ahead of Liffe Connect's launch, Ross McLean, Liffe's trading systems head, said: "Buying a system gave us no time benefits. The biggest issue was integration. We already have a large suite of software to support the trading floor, so we decided to start with a blank sheet of paper." Nick Bramley, Liffe senior marketing executive, said: "The system we have now is state-of-the-art, and member firms have given it a tremendous reception." Over recent months, there have been six system dress rehearsals - which Bramley said went "pretty well", with 47 member firms participating in at least one of the first five, and all 47 taking part in the sixth. A number of vendors, from large players such as Reuters and Datastream/ICV to smaller firms like OM Technology and Trading Technology, have used the Liffe Connect API (application program interface) to develop software for traders. The Liffe Connect project came in under its £10.5m budget, Liffe said.