The volume of trades on an electronic trading system
shunned by brokers for over a year has surged after the
International Petroleum Exchange restricted the hours for "open
outcry" trading.
In one day earlier this month 20% of trades in oil and natural gas
futures contracts were made electronically - compared to an average
of 5% since the ICE electronic trading system was launched just
over a year ago.
Traders have the choice of using the Java-based electronic trading
system, which integrates with Microsoft Excel spreadsheets, or
traditional open outcry trading.
A spokeswoman for the IPE said it had changed the hours in which
traders could use open outcry to sell shares to encourage the use
of the electronic trading system.
It has barred traders from using open outcry to sell contracts
during the morning and early afternoon, but it stopped short of
forcing traders to use the electronic trading system.
"It has been a conscious decision to encourage traders to use the
electronic trading system," said the spokeswoman. "We have seen
considerably higher volumes of trading done electronically."
The IPE, Europe's largest exchange for energy futures and options
and the last open outcry pit in the City, handles more than £1.1bn
of trades a day.
Until recently oil and gas traders had shunned the electronic
trading system despite oil prices reaching a record high.
The IPE trading system was developed by the exchange's parent
company Intercontinental Exchange. Advantages of the system include
access to international markets, being able to automate the trading
cycle - known as straight-through processing - and trading directly
without a broker, said the IPE spokeswoman.