An electronic trading system set up by the International Petroleum Exchange is still being shunned by traders six months after its high-profile launch.
The IPE told Computer Weekly that only about 5% of total trades made on oil and natural gas futures contracts were conducted using a browser-based version of the ICE electronic trading system, which is running in parallel with traditional open outcry trading.
The proportion of trades made electronically has risen only marginally from January, when less then 3% of total trades were handled this way.
The IPE, Europe’s largest exchange for energy future and options, and the last open outcry pit in the City, handles more than £1.1bn of trades a day.
A spokeswoman for the IPE said it was taking an "evolutionary" approach to increasing the use of its electronic trading system. She added that its long-term aim was for all trading to be carried out electronically using the ICE system, which the IPE has developed from parent company Intercontinental Exchange.
The ICE system has 350 registered users and the IPE is seeking to attract new traders from other exchanges.
Advantages of the electronic trading system include access to international trading markets, being able to automate the trading cycle - known as straight-through processing - and trading directly without the need for a broker, according to the IPE.
"The advantage of moving to an electronic platform is that the processes are captured automatically, so there is infinitely less chance of something going wrong in the trade cycle," said Martin Atherton, lead analyst at Datamonitor. "It should be easier to reconcile [transactions] and there is a better feedback loop, which could help for regulatory compliance."
A common reason for IT projects not achieving their targets is in a failure to secure the support of end-users, he added. "If the IPE has invested all this money in the electronic trading system and only 5% of trades are done electronically, then it seems like an incredible waste of money."
One industry consultant, who asked not to be named, said, "You have to force people to use electronic trading systems. For a market the size of the IPE, I think it would be difficult to do it any other way."