London Options Exchange Gets Wired

The London Internation- al Financial Futures and Options Exchange (LIFFE) is investing some 100 million ($162 million USD) over the next year to upgrade its core systems and automate links between its floor traders and their back-office operations, according to Karin Forseke, LIFFE's chief operating officer.

Forseke says that despite reports to the contrary, LIFFE is keeping its open outcry trading system. "We are firmly continuing and supporting (it), and we're doing that by providing the technology on the floor," she says.

In the trading pit, the new installation will generally speed up order making and order management, providing floor traders with hand-held computers and wireless communications, including headsets; elsewhere, the new system will create and install what Forseke has called the "son of LIFFE," a second generation electronic trading support system.

Currently, LIFFE has fully automated trading in options contracts for Japanese government bonds and after-hours trading in most futures. Next year, the exchange is expected to offer automated trading in individual equity options, such as Euroyen interest rate futures.

The investment is intended to maintain LIFFE's substantial volume lead over its Continental rivals, the Deutsche B rse, based in Frankfurt, and the Swiss Exchange, based Zurich. In this pursuit, LIFFE has its work cut out for itself; while LIFFE is currently the undisputed options exchange of Europe, the German, Swiss and French exchanges announced in mid-September that they will be installing electronic links between themselves so that traders can work on all three from one computer screen, in a sense combining their efforts. LIFFE's Forseke denied that the new investments have anything to do with its rivals' plans. FB