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  • Electronic trading at LIFFE

     
     
    Pure electronic environment. In November 2000 LIFFE abolished traditional open outcry trading in favour of an electronic trading environment, based on LIFFE CONNECT™, an electronic trading platform. The entire trading floor system was replaced by computers, signaling among others changes the disappearance of floor brokers. Whereas previously the floor brokers making offers or bids would be known, trading is now anonymous and purely order-driven.

    Traders do not know who their trading counterpart is, either before or after the trade. Dramatic as this move seemed at the time, the end-result has been increased liquidity and considerably easier access through linkages with global communications networks that provide electronic access on an equal footing, virtually regardless of location.

    Trading takes place by submitting an order, via a trading application (front-end software) into the LIFFE CONNECT™ central order book. Having received the orders the system’s Trading Host stores all orders in the central order book and performs order matching with corresponding orders (this is an electronic representation of the marketplace) where the criteria for determining trade priority depend on the contract being traded. Traders can submit orders; revise price, volume or a ‘Good till cancelled’ (GTC) order’s date; pull orders, and make wholesale trades. After a trade has been executed, trade details are sent into the Trade Registration System in real-time throughout the day for post-trade processing.

    Participants may change or withdraw unfulfilled orders at any time and are able to ‘see’ all available offer and bid prices, including the number of lots on offer or bid for at those prices, and many other market details at any one time. To find out how to link into the LIFFE CONNECT™ trading system go to www.euronext.com, or ask for their brochure ‘How the market works’. Price information is also available free of charge at http://www.euronext.com/trader/priceslistsderivatives/derivativespriceslists-46171-EN.html, but with a 15 minute time delay.

    LIFFE has broken new ground in that rather than obliging market participants to use LIFFE access software, a series of independent software vendors were contracted to design ‘tailor-made’ front-end solutions. At the end of 2001 there were 493 active direct and indirect Internet access sites in 43 countries in all 3 major time zones.
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