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Electronic trading edges closer according to the following front-page article from today's London "Financial Times".
Michael Soliatis
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SATURDAY JUNE 20 1998
Chicago may consider end to open outcry
By Paul Solman in London
The Chicago Board of Trade, the world's largest futures exchange, is
positioning itself for a move to full electronic dealing if its
customers demand a switch from traditional open-outcry trading.
"We see no reason to change from open-outcry trading, but we will make
certain we are ready, so that, if we have to move to electronic dealing,
we can," said Pat Arbor, CBOT chairman, yesterday.
The CBOT and the Chicago Mercantile Exchange have remained staunch
advocates of pit-based, open-outcry trading - despite the rapid move to
electronic trading by Europe's largest exchanges, and in the face of
plans by rival US groups to establish a new electronic futures exchange.
Earlier this month, members of the London International Financial
Futures and Options Exchange, which had until recently resisted a move
away from open-outcry trading, voted 98 per cent in favour of
introducing electronic trading on all contracts by mid-1999.
In an interview with the Financial Times in London, Mr Arbor said that
the CBOT's existing electronic system, Project A - which at present
operates only out of normal trading hours - would be ready for
round-the-clock trading by December.
Tom Donovan, president, added: "Our [open outcry] trading volumes are
rising, which suggests our customers want us to continue with open-
outcry trading - but if they want us to move to electronic trading, we
will satisfy our customers."
The exchange is also co-operating with Eurex - the electronic exchange
created by the merger of Deutsche Terminbörse (DTB) of Germany and
Soffex of Switzerland - to develop a global electronic system that will
allow the exchanges to trade each other's products.
Although the combined system is expected to be based on the system
developed by DTB, the CBOT said Project A would not be abandoned.
The two exchanges would have their own systems, "but with a common
engine".
Mr Donovan said yesterday: "By July 1999, the Chicago Board of Trade
will have the best open-outcry system in the world and the best
electronic trading system in the world."
He said the CBOT had also recognised the need to cut costs and improve
efficiency in its open-outcry dealing. He said it was using more
electronic clerks on the dealing floor, to speed up communications, and
was also aiming for "paperless trading".
Trading volume figures suggested the exchange's customers were committed
to pit-based dealing, Mr Arbor said.
He said this year's volumes were 15 per cent ahead of last year's, and
the CBOT was on-track for a trade of 280m contracts for 1998. Last year,
it traded 243m.
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END
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