Traders reject ecommerce revolution

Face-to-face contact preferred to cheaper e-trading

London?s International Petroleum Exchange (IPE) has resisted pressure to convert to cheaper, fully electronic trading this week, because traders say they want to retain face-to-face contact, writes Dan Sabbagh.

The oil and natural gas exchange?s board last week ended a four-month strategy review with an agreement to continue its open outcry system ? noisy face-to-face floor trading. Criticism of the cost of open outcry has grown significantly over the last year.

The IPE will introduce an electronic after-hours system, based on ETS ? the trading platform currently being developed with the New York Mercantile Exchange.

Richard Reinert, IPE chairman and chief executive of trading house Refco Europe, acknowledged the costs of electronic trading would be ?substantially? cheaper. But Reinert said that the IPE feared there could be a ?major loss of trading volume? because of hostility to electronic trading from locals (independent traders).

An IPE representative added: ?Locals, who make up 30% of our volume, said they wouldn?t want an electronic system. They want to read the market by looking at people?s faces.?

An IPE statement said: ?Open outcry, supplemented by electronic trading for after-trading hours, is the most appropriate way forward for the exchange.?

The IPE also announced a plan to relocate to the Royal Exchange building, in a migration and IT upgrade costing between #5 million and #10 million.