Investing February 14, 2001

Stock Futures Debuting Strong in London

February 14, 2001 (PLANSPONSOR.com) - Plan sponsors with select European and US stock exposures now have a new tool at their disposal: stock futures which were launched January 29 at the London International Financial Futures Exchange (LIFFE).
Reported by

LIFFE reported that in their first e of trading, stock futures traded an average of 5,180 contracts per day.  John Foyle, LIFFE’s deputy chief executive, termed the first week of trading “very positive.” The new futures contracts attracted interest from new market segments, with trading in US stocks “particularly enthusiastic,” including some futures trading which started before the start of trading in the US.

Some 25 stocks were launched January 29 representing major corporations in the US, the United Kingdom, Spain, Netherlands, Italy, German, France and Finland.  The US corporations which have futures on them are AT&T, Cisco Systems, Intel Corp., Microsoft, Citigroup, Exxon Mobil Corp., and Merck & Co.

USA Bound

The stock futures are all traded electronically, compared to the open outcry method in the US. LIFFE launched the new product on its LIFFE Connect trading platform which clears and settles trades on a single system and under one regulatory system.

Stock futures are slated to start in the third quarter of this year for institutional traders and in the fourth quarter for retail speculators.  Final decisions about whether the contracts will trade through the open outcry system which relies on handwritten cards being submitted for clearing or on a screen have not been finalized, according to exchange officials in Chicago where the stock futures will trade.

Equity options exchanges, such as the Chicago Board Options Exchange, Pacific Stock Exchange and American Stock Exchange, are also planning to trade futures on US stocks, as part of a regulatory plan reached at the end of 2000.

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