Angry traders pull the plug on electronic age
By Martin Waller
TRADERS on the floor of the International Petroleum Exchange in London have staged a revolt and are refusing to use electronic trading screens introduced this week that, they say, will cost them their jobs.
The IPE introduced daytime electronic trading in the all-important Brent oil contract, which sets the indicative price for two thirds of the world oil market, as a precursor to the eventual phasing-out of “open outcry” trading. This has traditionally taken place in a highly charged atmosphere between traders, or “locals”, in their distinctive coloured blazers at the exchange. But it has largely been abandoned elsewhere in the City, for example, at the Stock Exchange as long ago as 1986 and more recently at Liffe, the financial futures market.
As a result of the boycott, volumes of trading electronically at the IPE during its first week have been virtually nil. On Thursday, for example, a day of hectic trading as the oil price topped $30, there were just 57 lots traded electronically while almost 147,000 lots were traded in the traditional way on the floor, or “pit”. Traders say Richard Ward, the IPE chief executive, has been jeered and booed on his regular visits to the floor. They say that when one trader dared to use the electronic screens out of hours, when the floor was closed, his colleagues then refused to deal with him. The boycott will go on too, they say. “We’re quite happy with how its gone in the first week,” one local said.
Mr Ward said the boycott was “not catastrophic, far from it. I’m not surprised business is in the pit. That’s where people are used to putting their business. They are boycotting something they have never used.”
The exchange was now introducing all-electronic trading that would replace open outcry. “These things take a while to succeed. Ultimately, this business will go fully electronic. I’ve not put a time-frame on that.”
As a result of Thursday’s market volatility, a record 233,000 lots were traded through the exchange, he said. He admitted he had been booed and jeered. “Some of it is goodnatured. Some of them clearly resent what we are doing. I’ve never felt threatened or intimidated on the floor. I see it as good-natured banter, obviously with a message behind it.”
Other markets abandoning open outcry have cut jobs.
The price of Brent crude yesterday rose to its highest since the Iraq war ended, up $1.35 to $31.49, after the International Energy Agency cautioned over a tight market this winter. |
