Electronic trading helps Eurex overtake Liffe

Eurex - the German-Swiss derivatives exchange - claims moving to electronic trading was a major factor in becoming Europe's largest market.

It overtook London-based rival Liffe this week, and is now only second in the world behind the Chicago Board of Trade (Cbot).

Formed by the merger of Frankfurt's thriving Deutsche Termin Borse and Soffex of Switzerland, Eurex used its electronic trading system to do more business than Liffe.

At the start of the month, Eurex's German government bond future, the bund, became the most heavily traded futures contract in the world. This is in stark contrast to the situation at Liffe, which announced this week that it traded 28 per cent fewer contracts this July than during the same month last year.

John Foyle, Liffe's acting chief executive, noted that July is traditionally a quiet month at the exchange. "European short-term interest rates have clearly converged ahead of European Economic and Monetary Union, which has meant lower volatility and led to decreased trading activity in Liffe's European short-term interest rate products," he said.

Liffe is introducing an electronic trading platform which will run side-by-side with the open outcry, pit trading system. However, the new system won't be completed until the second quarter of next year, allowing Eurex to continue poaching Liffe contracts.

Cbot said it will rapidly move towards electronic trading, with sources close to the situation saying the exchange is likely to adopt Eurex's tried and trusted platform. Cbot declined to comment.