The International Petroleum Exchange (IPE), the last
remaining open outcry trading pit in the City of London, has made
little headway in persuading traders to adopt an electronic system
introduced three months ago.
In the system’s first week of operation last October, the IPE
said 625,150 trades were made on the Brent Crude Futures contract,
but less than 3% of them were handled electronically. Since then,
the proportion of electronic trades has barely changed, the
exchange said. On a single day last week there were £1.6bn worth of
trades in Brent Futures.
Richard Ward, chief executive of the IPE, told Computer Weekly
that the technical performance of the ICE system was satisfactory
and that enhancements to it were planned during this year.
"We are happy with the ICE system, but you cannot force people
to trade electronically," he said. "I would like to see the volume
of business on the electronic system increase."
Advantages of the new system include being able to automate the
trading cycle - a process known as straight-through processing -
and trading directly without the need for a broker, Ward added.
He also said the IPE would try to attract customers trading oil
electronically on rival exchanges, such as Liffe and Eurex, but
some analysts said the IPE would face an uphill struggle.
"The electronic trading market is very competitive and, if the
IPE’s users really do not like the system, I cannot see why someone
else will," said Anthony Miller, research director at analyst firm
Ovum Holway.
In 1998, the IPE scrapped plans to launch an electronic trading
system after a four-month review, which concluded that the system
could lead to a reduction in trading volumes because of hostility
from independent traders.