Software vendors vye for electronic trading cash

Software vendors are under pressure to perform when financial institutions plug in to London's latest electronic financial trading exchange, to be launched in April.

Following last November's apparently "error free" and "smooth" partial launch of the Liffe Connect electronic trading system, the exchange is facing a bigger challenge when it migrates the rest of its trading on 12 April.

So far, 15 independent software vendors have developed front and back end applications that will let members of Liffe - the London International Financial Futures and Options Exchange - trade using the Connect system. The vendors include Datastream, Reuters, Bloomberg and Trading Technologies.

Liffe Connect is used for individual equity options at present, but in April the bulk of Liffe's trading will be added to the system. Long gilt and five year gilt first, then index futures, followed by the other components of Liffe.

London based software vendor, Iris, said the addition of index futures to the system spurred them to develop an application for Connect from scratch. Iris also makes software for equity options trading, serving customers in London and Amsterdam.

"We realised that equity is small and what's really big is futures," said Mike O'Hara, managing director of Iris, "So we started from scratch with object oriented tools an built something new for the futures market."

All the vendors demonstrated their applications to Liffe using a dummy system last week. This week, the vendors were invited back to the Stock Exchange to pitch their products at around 450 interested Liffe members.

Connect is so far proving reliable and robust, said Liffe's chief executive Hugh Freedberg.

"We've seen volume trading two thirds above the level prior to the launch," he said. Freedberg later confirmed that the previous daily record of 28,600 transactions had just been beaten by several thousand.

"We like to believe that by the time the system has been rolled out at the end of 1999, we will have a piece of electronic trading technology that will set a benchmark for the whole industry," said Freedberg.

Liffe developed Connect itself, in consultation with the independent software vendors and Microsoft, Compaq and Sun. Liffe says it plans to work further with Microsoft to see how it can line up Microsoft's standards for the financial industry with the Liffe API.

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