Chicago Board of Trade moves towards electronic trading

The Chicago Board of Trade (Cbot), the world's largest derivatives exchange, has said it intends to offer electronic trading alongside traditional open-outcry. The move follows the success of systems for trading futures and options electronically in Germany and France.

Cbot said Tuesday that its board of directors had voted "overwhelmingly" in favour of daytime side-by-side open-outcry and electronic trading, to be introduced on 28 September this year. The exchange's members will vote on the change on 18 August.

Thomas Theys, managing director of PAT Systems, which provides software for brokers trading on Windows-based PCs, commented: "This is partly to do with Cbot jockeying for position on a world stage, but also about it protecting the interests of its members."

Seat prices on the exchange have fallen in recent months, and Cbot hopes a successful electronic trading system would not only make doing business on the exchange more appealing, but provide a valuable income source for members.

Theys said the board's decision is also related to the exchange's attempts to guard against rivals pressing ahead with an electronic platform. The Cbot and the Chicago Mercantile Exchange have taken legal action against an alternative electronic trading system, the Cantor Exchange, set up by brokers Cantor Fitzgerald, which it claims violates the free competition rules imposed by the Commodity Futures Trading Commission.

The London International Financial Futures and Options Exchange (Liffe), Europe's largest derivatives exchange, is moving towards a system that allows full electronic trading in addition to open-outcry. Liffe admits the catalyst for change has been seeing its market share of the key German bund contract steadily eroded by the electronic Deutsche Termin Borse over the past year.