Liffe seeks wire presence in HK
The London International Financial Futures and Options Exchange (Liffe) has applied to Hong Kong's Securities and Futures Commission to roll out its electronic trading platform.
The move comes as a fierce battle is fought between Liffe and top rival Eurex - Europe's largest derivatives exchange - for global market share.
International access to Liffe products is seen as vital to the long-term future of the exchange and officials hope a wide dissemination of its systems will ensure large volumes.
Liffe yesterday confirmed applications had been made to Hong Kong and Japan for permission to install its new Connect system, following approval last week from the United States Commodity Futures Trading Commission, allowing direct dealing by US investors. Connect is already available throughout Europe.
Liffe suffered a blow from Eurex last year when the Swiss-German exchange poached Liffe's popular German bund futures contract, the most actively traded instrument in Europe, propelling Eurex to the No 1 spot among European exchanges.
Last month Eurex upped the stakes further after the Chicago Board of Trade, one of the main derivatives exchanges in the US, voted to link up with Eurex, creating the world's largest market for exchange-listed derivatives.
Liffe has been fighting back by moving rapidly towards electronic trading and abandoning the traditional open outcry system, amid rumours that it was also in talks with the Chicago Mercantile Exchange about a similar link-up.
Liffe yesterday said it was hoping for a quick response from the Hong Kong authorities, as it was keen to ensure its system was integrated into investment banks' trading software before a much-expected systems freeze to resolve Y2K issues takes place.
Many banks and brokerages are expected to suspend the introduction of new software into their systems in the fourth quarter to allow any last-minute elimination of millennium bug-related glitches.
'Hong Kong is an important financial centre, and we have applied for permission to have our screens there . . . we are not expecting any difficulties with the regulator,' a Liffe official said.
The installation of Liffe Connect will mean all Liffe members with operations in Hong Kong will have direct access to the exchange, including euro money market contracts, in which the Liffe still claims to have 90 per cent of the world's business.
Connect will also offer direct access to Liffe's euroyen and Japanese government bond futures contracts, in which there is expected to be considerable interest, and next month it will also introduce its short-term interest rate futures products.