Faultless First Week For Electronic SFE

The Sydney Futures Exchange (SFE) has had a faultless start to its first week as a fully electronic exchange. Since Monday, 15 November, all trading at SFE has been conducted on SYCOM® IV, the latest generation of SFE's computerised trading platform. SFE's subsidiary, the New Zealand Futures and Options Exchange, converted to SYCOM® IV full-time on 16 August 1999. SYCOM has operated for 23 hours a day, all week, without any downtime, demonstrating the system's reliability and capacity. More than 300 terminals have been connected, with 15% of executed volume coming via Member's interfaces to the SYCOM® platform. The average number of trades each day has been 101,108 futures and options contracts. This compares favourably with the average daily volume for October of 117,454 futures and options contracts. Mr Leslie Hosking, SFE Chief Executive, said: "The most satisfying aspect of the new system is that SFE's major customers and their brokers are pleased with the market on SYCOM®. They have roundly applauded the tight spread between the best buy and sell price, and the transparency of the volumes on offer on each side." SFE's major customers, the investment managers and banks, have indicated that SYCOM® has provided a new level of certainty and immediacy in the execution of their business. Mr Hosking added: "Customers are more willing to show the volume that they wish to execute in an electronic market. This is because the bids and offers are queued into the system for all to see. "However, there are some critics of the new system. The old traditional floor traders who made a living intervening between customer orders are unhappy with the new transparent functionality of SYCOM® and its ability to handle a substantial volume of customer business without their involvement. These negative comments about SYCOM® should be considered in the context that what might be good for traditional floor traders is not necessarily good for SFE, its customers or for Australia's financial markets as a whole." The strong debut of full electronic trading confirms the results of a recent study conducted by the Futures Research Centre, a division of SIRCA, into the efficiency of automated futures markets. Using the experience of the Share Price Index futures contracts, the study found that bid-ask spreads, commonly seen as a measure of market efficiency, are significantly lower on the screen-traded system. The report concluded that the electronic system introduced by SFE facilitates higher levels of liquidity than the floor-traded market.