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.