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Microcap & Penny Stocks : Tokyo Joe's Cafe / Societe Anonyme/No Pennies -- Ignore unavailable to you. Want to Upgrade?

To: Terp who wrote (30623)	12/18/1998 10:46:00 AM
From: R Hamilton	Respond to of 119973

EGRP etrade..last nite's news Chicago's famed trading floors face uncertain 1999 By Stephanie Sprague CHICAGO, Dec 16 (Reuters) - The Chicago Board of Trade has led the world's futures exchanges in volume for yet another year, but the future of Chicago's famed "open outcry" trading floors has never been more uncertain in view of mounting competition from all-electronic exchanges. Uncertainty about the CBOT's direction in 1999 heightened last week when members voted to oust longtime chairman Patrick Arbor in favor of David Brennan, a third-generation pit trader, by a margin of 19 votes out of about 2,000. Arbor's strategic plans to combat potential challengers in 1999 are now in question, particularly his plan to link up with the all-electronic European exchange Eurex. Asked on Wednesday about the likelihood of an alliance with Eurex, Arbor told Reuters Television, "The odds are a little less now than before. I do think it's somewhat in jeopardy." Brennan was a vocal critic of the Eurex alliance, which had generated member opposition long before it became a key campaign issue. "I do think that part of the reason I lost the chairmanship is somewhat of an anti-Eurex feeling here at the Chicago Board of Trade," Arbor said on RTV. CBOT directors will revisit the CBOT-Eurex plan on Tuesday, December 22. Under the current agreement, the CBOT will pay Eurex $38 million to enhance software and electronic order entry systems. Some opponents have put a larger price tag on the link. They also say the linkage, which would give anyone with a Eurex terminal access to CBOT products, could further erode the value of CBOT seats and steal volume from the CBOT's pits. While the CBOT's volume rose to a new global record of 265 million contracts through the end of November, Eurex seized second place in global futures and options trading in 1998 as its volume soared 64 percent to 232 million contracts. The Chicago Mercantile Exchange is in third place, as its year-to-date volume rose to 211 million contracts through November. Some CBOT members and officials insist the CBOT will remain an open outcry exchange for the next several years. "We've taken a look at technology and said we still believe open outcry is superior, but we said it with the caveat, 'given present technology,'" Jay Sorkin, a T-bond options pit broker, said on RTV. "Given present technology, we think we can do a better job in the pits than a screen can do," Sorkin said. Arbor said he expects volume on the CBOT's electronic Project A system to make up 10 percent of total CBOT volume in 1999, and 15 to 20 percent of total volume in the next several years. While volume on Project A and the CME's electronic GLOBEX-2 system has more than doubled to 21 million contracts in 1998, it still represents a small fraction of combined pit volume of 450 million contracts. Arbor believes chairman-elect Brennan will continue with the CBOT's efforts toward electronic order routing, which allows customers anywhere in the world to directly enter their orders in the pit without paper, runners or even booths. Brennan, who has been unavailable for an interview, wrote in a November 30 letter to members that the CBOT's current order entry system is "primitive." According to the CBOT, only 5 percent of orders were electronically routed into the pits in 1998. David Downey, president of brokerage TimberHill LLC, said on RTV the exchange should offer incentives to brokerage firms, or futures commission merchants (FCMs), to develop their own proprietary routing systems. "I've suggested on a number of occasions that they give incentives to the FCMs to develop these order routing systems and bring those customer order flows to the pit electronically, and in return for doing that the FCM would get a break on certain fees," Downey said on RTV. Several firms are already seeing customers use the Internet to trade anything from the CBOT's soybeans to the CME's mini S&P contract. Some industry analysts say Internet-based companies could become serious competitors to traditional exchanges. They point to E*Trade Group Inc.'s <EGRP.O> recent plans to launch an all-electronic exchange to rival the Chicago Board Options Exchange. "They are simply out there with the potential to gather million and millions of customers," Downey said. 18:38 12-16-98