article : ' metals screen trade set to evolve ' please find attached the above article from the rueters english news service , october 12 , 2001 .
uk : interview - metals screen trade set to evolve - spectron .
by andy blamey
10 / 12 / 2001
reuters english news service
( c ) reuters limited 2001 .
london , oct 12 ( reuters ) - electronic trading of base metals futures has established a firm foothold in the market but the nature of online trading platforms looks set to evolve further , says gavin gross , head of lme metals at spectron futures ltd .
uk - based energy and commodities broker spectron ' s electronic platform for the trading of london metal exchange ( lme ) contracts has become required viewing for traders alongside the lme ' s own system lme select and the enron group ' s enrononline .
" i think we ' ve proved that people will trade lme derivatives contracts online , because there are some great advantages to doing so , " gross told reuters in a telephone interview .
" and unlike the physical markets , where things haven ' t really taken off online , all three platforms are pretty much indispensable to the market . "
both spectron and lme select are neutral platforms in which category 1 and category 2 lme members trade with each other , while enrononline is open to a wider membership but has enron itself as the sole counterparty in each transaction .
this leaves a gap in the market for a multi - party trading system open to industry participants beyond the immediate trading community , gross suggested .
" i think the clear trend for metals derivatives trading for the future is for open platforms which would allow dealers and clients in the market to interact with each other online , " he said .
direct access for clients to an electronic trading environment could mean changes in the role of the broker , he said .
" clients will have the advantage of more control , more visibility and more transparency in what they do . however , they ' ll have to pay for services , " gross said .
" you could see a situation where dealers specialise in different areas - certain dealers would provide credit functions , certain institutions would provide clearing , others would provide execution and certain companies would provide market - making . "
difficult conditions
difficult market conditions are already forcing metals traders to rethink their activities ; this week alone has seen n . m . rothschild & sons exit base metals trading and both bank of nova scotia and enron looking to scale back .
" on the lme now you ' ve got low volumes , falling volatilities , falling prices and we ' re in the grips of a bear market . it ' s very , very poor for business in general , " gross said .
" there are too many dealers around chasing a shrinking amount of business . . . each company is going to have to look very carefully at their business and their staffing levels . "
spectron has not been immune from declining volumes .
" our volumes for the first 12 months of operation were fantastic , way beyond what we had expected . however , our volumes have fallen in the recent quarter , " gross said .
" that ' s due to two factors : first , the overall market activity is lower , and second lme select has managed to attract some of the business that we would previously have had 100 percent of . "
the company is now looking at ways to further develop its trading platform .
" we ' re beginning to investigate ways to add certain features and do things differently . that might involve creating an alternative platform where clients could access prices and thereby widen the service , " gross said .
but , he stressed , " we have to keep the interests of our dealer clients foremost . "
uncertainty
in the current environment , the lme ' s refusal to throw its weight behind either open - outcry floor trade or its new screen system - the exchange has taken pains not to express any preference and to " allow the market to decide " - may prove to be counterproductive , gross said .
" by having two systems running side by side . . . the exchange is almost moving in two totally different directions , " he said .
" there ' s a feeling that the ring is doomed , which doesn ' t do anything to encourage its use , while the reluctance to fully back electronic trading means that you ' re still only seeing a trickle of business going through select in terms of overall volumes . "
while preferences vary in different sectors of the market , the current uncertainty is helping no - one , he said :
" metals traders just want to trade . they just want to know with some kind of certainty how the market will be structured in future so they can structure their business to support that and make money . "
article : ' metals screen trade set to evolve '
please find attached the above article from the rueters english news service , october 12 , 2001 .
uk : interview - metals screen trade set to evolve - spectron .
by andy blamey
10 / 12 / 2001
reuters english news service
( c ) reuters limited 2001 .
london , oct 12 ( reuters ) - electronic trading of base metals futures has established a firm foothold in the market but the nature of online trading platforms looks set to evolve further , says gavin gross , head of lme metals at spectron futures ltd .
uk - based energy and commodities broker spectron ' s electronic platform for the trading of london metal exchange ( lme ) contracts has become required viewing for traders alongside the lme ' s own system lme select and the enron group ' s enrononline .
" i think we ' ve proved that people will trade lme derivatives contracts online , because there are some great advantages to doing so , " gross told reuters in a telephone interview .
" and unlike the physical markets , where things haven ' t really taken off online , all three platforms are pretty much indispensable to the market . "
both spectron and lme select are neutral platforms in which category 1 and category 2 lme members trade with each other , while enrononline is open to a wider membership but has enron itself as the sole counterparty in each transaction .
this leaves a gap in the market for a multi - party trading system open to industry participants beyond the immediate trading community , gross suggested .
" i think the clear trend for metals derivatives trading for the future is for open platforms which would allow dealers and clients in the market to interact with each other online , " he said .
direct access for clients to an electronic trading environment could mean changes in the role of the broker , he said .
" clients will have the advantage of more control , more visibility and more transparency in what they do . however , they ' ll have to pay for services , " gross said .
" you could see a situation where dealers specialise in different areas - certain dealers would provide credit functions , certain institutions would provide clearing , others would provide execution and certain companies would provide market - making . "
difficult conditions
difficult market conditions are already forcing metals traders to rethink their activities ; this week alone has seen n . m . rothschild & sons exit base metals trading and both bank of nova scotia and enron looking to scale back .
" on the lme now you ' ve got low volumes , falling volatilities , falling prices and we ' re in the grips of a bear market . it ' s very , very poor for business in general , " gross said .
" there are too many dealers around chasing a shrinking amount of business . . . each company is going to have to look very carefully at their business and their staffing levels . "
spectron has not been immune from declining volumes .
" our volumes for the first 12 months of operation were fantastic , way beyond what we had expected . however , our volumes have fallen in the recent quarter , " gross said .
" that ' s due to two factors : first , the overall market activity is lower , and second lme select has managed to attract some of the business that we would previously have had 100 percent of . "
the company is now looking at ways to further develop its trading platform .
" we ' re beginning to investigate ways to add certain features and do things differently . that might involve creating an alternative platform where clients could access prices and thereby widen the service , " gross said .
but , he stressed , " we have to keep the interests of our dealer clients foremost . "
uncertainty
in the current environment , the lme ' s refusal to throw its weight behind either open - outcry floor trade or its new screen system - the exchange has taken pains not to express any preference and to " allow the market to decide " - may prove to be counterproductive , gross said .
" by having two systems running side by side . . . the exchange is almost moving in two totally different directions , " he said .
" there ' s a feeling that the ring is doomed , which doesn ' t do anything to encourage its use , while the reluctance to fully back electronic trading means that you ' re still only seeing a trickle of business going through select in terms of overall volumes . "
while preferences vary in different sectors of the market , the current uncertainty is helping no - one , he said :
" metals traders just want to trade . they just want to know with some kind of certainty how the market will be structured in future so they can structure their business to support that and make money . "