NYBOT to offer electronic trading

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NYBOT to offer electronic trading
By Jennifer Hughes
Published: January 25 2006 18:36 | Last updated: January 25 2006 18:36

The New York Board of Trade is planning to offer electronic trading for the first time, according to an agreement signed with the Chicago Board of Trade which will host NYBOT’s financial products on its electronic system.

The move is the latest in the trend towards electronic trading among the biggest US exchanges and a first for NYBOT, best known for its heaving pits of coffee, sugar and cotton traders.

Under the non-binding agreement announced yesterday, CBOT will host trading of NYBOT’s currency futures and options products and its index futures, including the widely followed Russell indices.

Frederick Schoenhut, NYBOT chairman, said the deal would “provide our financial products with the tools they need to ensure continued growth’’.

While European exchanges have largely given up trading floors for all-electronic offerings, most of the biggest US exchanges are still hosting large open-outcry operations amid an ongoing debate over the future of floor trading.

Earlier this week, CBOT said it was seeking a meeting with its members to approve rule changes that would allow it to electronically trade its agricultural products, which are still floor-based.

CBOT and the Chicago Mercantile Exchange have led the way in developing electronic trading, driven by their cross-town rivalry and competition threats from Deutsche Börse’s Eurex US platform. But the shift away from floors has made it potentially easier to poach or imitate a rival’s flagship products.

Earlier this week, CME shares reached new highs on reports it was planning to launch electronically-traded energy futures contracts, bringing it into competition with the New York Mercantile Exchange, in whom last month it was reportedly considering taking a stake.

NYBOT’s currency futures compete with the CME’s currency products, which have been in the vanguard of its push into electronic trading. Last year, Eurex US began offering its own currency products in direct competition to its US rivals.

Industry observers say NYBOT’s deal with CBOT should only be considered a first step. “This deal doesn’t mean that CBOT’s platform is going to be the one that NYBOT is going to choose for its other products should it decide to take them electronic,” said John Lothian, president of the electronic trading division of Price Group, a Chicago broker.
 
CBOT and NYBOT Sign Non-Binding Agreement to Host

NYBOT Financial Contracts on CBOT’s Electronic Trading Platform



CHICAGO, NEW YORK - January 25, 2006 – The Chicago Board of Trade (CBOT®) and the New York Board of Trade® (NYBOT®) announced today that the two exchanges have executed a non-binding letter of intent to host NYBOT’s financial products on the CBOT’s electronic trading platform, powered by Atos Euronext Market Solutions (AEMS) flagship product LIFFE CONNECT®.



CBOT President and CEO Bernard W. Dan said, “We welcome this opportunity to work strategically with NYBOT in helping to distribute its products to an even broader international audience. This non-binding agreement with NYBOT comes on the heels of the CBOT establishing a successful hosting agreement with three of North America’s largest grain exchanges, as well as the recent joint announcement with the Singapore Exchange regarding the launch of our new all-electronic exchange in which the CBOT will host the new Asian-based commodity products on its electronic trading platform.”



Dan added, “By offering one of the most premier electronic trading platforms to NYBOT, the CBOT is working to bring the industry greater standardization of electronic trading. This standardization is increasing efficiency and reducing costs for market users by providing access to multiple exchanges from a single location.”



NYBOT Chairman Frederick W. Schoenhut said, “Our decision today marks a major new commitment to expand our markets and to enhance service to our market users at the New York Board of Trade. This new electronic system will provide our financial products with the tools it needs to ensure continued growth in this very competitive arena.”



AEMS President and CEO Jean-Marc Bouhelier said, “This initiative is a tremendous opportunity to provide LIFFE CONNECT® to the NYBOT in partnership with the CBOT. Our state-of-the-art platform has become widely embraced by the global marketplace. The CBOT hosting model supported by AEMS has proven to be an efficient and cost effective venue for multiple exchanges, allowing worldwide access and distribution of their products through a single platform.”










In addition to the CBOT’s agricultural, financial, and metal products, the Exchange’s electronic trading platform currently hosts futures and options products offered by the Kansas City Board of Trade (KCBT®), the Minneapolis Grain Exchange (MGE) and the Winnipeg Commodity Exchange (WCE). The CBOT entered into the landmark agreements with these institutions in 2004. Each exchange remains independent and maintains separate open and close times.



The CBOT also plans to host the new Asian-based commodity contracts to be listed on the Joint Asian Derivatives Exchange (JADE), a joint derivatives exchange formed in partnership between the CBOT and the Singapore Exchange (SGX), expected to launch by the end of the third quarter of 2006.



NYBOT recently experienced its third straight record volume year in 2005, with total volume jumping 20 percent to a record of 37,945,585 futures and options contracts. Currency futures (including the U.S. Dollar Index® [USDX®], symbol: DX) also established a new record with 3,604,877 contracts changing hands, an increase of 53 percent. The USDX had a combined futures and options record of 1,159,938 contracts and the futures market was up 55 percent. Currency Pairs at NYBOT saw substantial growth, with Euro/Yen, Euro/Pound, Euro/Swiss and many others setting new records. The Exchange began trading the FINEX® Euro Currency Index (ECX, symbol E) futures and options index contracts on January 13, 2006.
 
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