Mark Goodliffe, the youthful new financial director at the London International Financial Futures and Options Exchange, has joined an organisation at a crossroads. The exchange lost its lucrative German bund contract to Eurex in 1998. And the 54 million contracts it traded in the first half of 1999 were well down on the 91 million traded during the equivalent period in the previous year. This year, Liffe has been squaring up to fight back and win some of London's increased liquidity following the launch of the euro. Switching to automated screen-based trading, cutting back its property portfolio, reducing head count and, in August this year, forging an all-important alliance with the Chicago Mercantile Exchange are all the measures of an exchange facing up to a more competitive present and a testing future. But if the exchange faces challenges, Goodliffe displays only confidence in its future. 'I have joined at a time when it's regenerating. Liffe has come through some bad times, and it's now figured out what it needs to do to survive in the future. It's as exciting a point as one could come in at. It's very much been through the trough in its curve and I do see it as having a very robust future.' His own role in this future represents a change in direction for him personally. Until four months ago, Goodliffe was FD at spread-betting company IG Index. It's a role he describes as 'the sharp end' when it came to crunching numbers and delivering reports. But he clearly already relishes the chance Liffe is giving him to get involved in managing people and processes, identifying weaknesses in controls and keeping an eye on costs. 'It's even more process-driven than I had expected. I haven't actually needed a calculator during my few months here.' He is no stranger to the turmoil and mergers of the City. Goodliffe trained with Stoy Hayward after university, but following a call from an agency took a job with Morgan Stanley where he remained for two and a half years. He had had no financial clients in his training and no exposure to the financial markets, but was quickly attracted by his first experiences of the securities markets. 'I did a product control job, and I was very excited by the environment. It was a very different form of accounting to any I'd encountered before. Lots more noughts on the numbers and just a completely different buzz about the place.' Later he moved to Credit Agricole Futures where, as the first in-house accountant, he went through the formative experience of building up systems and controls from scratch as well as putting together financial statements for the past - and unaccounted for - 18 months. 'I guess that's where I learnt the most, certainly about management and probably about controls too.' His present task - moving Liffe from its status as a mutual to a corporate entity with the competitive focus of a global service provider - comes at an exciting time for global exchanges. Two to three years ago, Liffe was committed to floor-based trading. In fact it had bought property in order to cope with the expected increase in trading volumes. It had not at that point seen its future in screen-based trading. And it has had to face a rude awakening. But Goodliffe and the executive team are cutting a swathe through the old way of doing things - they're looking to streamline in every way they can, and they can no longer rely on the old ways of the City and turn to institutional members. 'We've got shareholders now,' he insists, 'They want to see a return. They don't just want us to exist because the market needs us - that's no use to a shareholder.' Day to day, these changes mean a great deal in terms of accounting treatments. Selling assets, reducing staff levels all leave their accounting legacies. 'For me, the main focus is looking at the costs with very much a critical eye,' says Goodliffe. 'We can't to some extent control the revenues. We can market for all we're worth and we can develop the best trading platform that we can achieve. But at the end of the day, if people want to trade with us and pay our fees consequently, that's up to them.' But Goodliffe has a 22-strong team that largely takes the report-writing out of his hands, leaving him to focus on change management and review. 'That's certainly been very useful,' he smiles. 'It gives me time to sit back and consider what I can contribute without being up to my head in piles of paper, with reports to be produced by a certain deadline.' And thinking time is crucial in this environment. Exchanges are forging alliances, automating their trading platforms and addressing new markets. They are in a position of reinventing themselves with few established examples to feed off. And that means that the risks involved are great. 'A small entrepreneurial firm can wing it and take a risk and learn from its experiences. Liffe can't afford to be wrong in anything it does, because it can lose all its business in the blink of an eye. So I have to make absolutely sure that things are in the best possible state, and that obviously provides a tension in the new commercial environment.' That tension - between financial controls and the entrepreneurial risk taker - is nothing new to the City. But Goodliffe believes that accountants and traders must come closer together to survive in the current climate. 'I think that the gap is continually narrowing. It's no good - and financial markets are realising this - having as accountants people who have no understanding of the dynamics of the floor. They're not going to understand what they're accounting for in order to apply the right treatments and provide the necessary controls.' In a sense he's as much a risk manager as he is financial director. 'We have a risk assurance department, but that doesn't take away from the fact that everybody, particularly in an area like finance, has to be aware of the risk. There's just no scope to allow an error. We just can't afford to report wrong figures, because the whole exchange is at risk if we do. 'Liffe has been pulled into a more commercial environment in the sense that there are different people in different parts of the world suddenly who can do the business. They don't have to turn up here in coloured jackets anymore. 'They can call up a line on their screen in Frankfurt. That means that now we have to be competitive and we can start to join the world in which entrepreneurial firms try things out. But again, we can't afford to take chances that would lead to losing business.' As an accountant, he knows what controls need to be in place if Liffe is to haul itself through this period of upheaval. As an accountant in the City, he knows it would be foolish to bank on anything except change. 'Working in the City these days, any day could be your last. Things won't be the same in a few years wherever you're working. 'If you're not ready for that to be an opportunity, then you're likely to be a victim. I'm certainly not going to make any plans about my job in three to five years time. 'All I can guess is that it won't be this. I'd like to say that I'll be spending a lot of time here, but there's no certainty.' FROM PIT TO SCREEN: THE END OF THE OUTCRY Tomorrow evening will see many of Liffe's remaining open-outcry pits close for the last time. Trading in short-term sterling interest rate contracts will no longer take place on the traditional trading floors. And already 70% of the exchange's trading volume is conducted via the screen. Although the pits will remain open for financial futures options and FTSE futures, the closure effectively signals the end for the brightly-jacketed traders that are for the outside world synonymous with the exchange. Liffe's decision to close the pits has received mixed reviews. It had promised to retain open outcry and run it in tandem with Liffe Connect, its screen-based system, for a transitional period. That period has been cut short - it was expected to last into next year. Hugh Freedburg, Liffe's chief executive, said: 'We had planned for a transition period of several months, recognising that it would take short-term interest rate contracts time to migrate to the screen. However the transfer has occurred faster than expected.' In fact, many traders made the move from pit to screen as soon as Liffe's executive announced that the Stir pits would close. Only a few stalwarts will see out tomorrow's last day.
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