French assault on gilts contract
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE PRESSURE on Liffe, London's futures exchange, intensified yesterday when Matif, the French futures exchange, announced plans to trade in gilt futures, an area where Liffe currently enjoys a monopoly.
The French exchange is to begin trading 5 and 10-year gilt futures on its electronic trading system on July 15.
In a statement, Matif said: "The launch of the new gilt contracts comes in response to the wish of market participants, particularly in the UK, to benefit from the advantages of electronic trading."
Dealers at Liffe trade gilt futures using the open outcry method of trading. However, Liffe this week said it would move the five-year gilt future on to APT, its screen-based trading system, in August.
Traders now predict competition for trade in gilt futures to turn into a three way battle. The DTB, the German futures exchange, is widely expected to begin trading gilt futures later this year. The DTB, which also uses electronic trading, has already managed to win the bulk of the trade in the prestigious German government bond future, the Bund, from Liffe.
Liffe has faced fierce criticism from its members for failing to respond sufficiently quickly to competition from foreign exchanges.
Ed Condon, director of European listed derivatives at Credit Suisse First Boston, said: "The market is not big enough to support three exchanges. Volume will automatically gravitate to one exchange. Liffe has 100 per cent share of the gilt, and the others will need to do something different to persuade people to switch. They are hoping that electronic trading will.
A Liffe spokesperson said the exchange would be "reviewing urgently" whether to bring put its 10-year gilt future on to its APT system.
Outlook, page 19
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments