LIFFE's Mid-Curve Options Display Dramatic Growth

The London International Financial Futures and Options Exchange (LIFFE) has recently recorded dramatic growth in its Euribor and Short Sterling One Year Mid-Curve Options. This follows the successful transfer of LIFFE's financial options from open outcry to LIFFE CONNECT™ on 2 May 2000. Since then substantial increases have been observed in the number of market participants, contract liquidity, volume and open interest.

There have been 24 different market participants active in the Euribor Mid-Curve Option over recent months providing tight bid and offer spreads in significant size. This market activity has led to a dramatic rise in average daily volume from 45 contracts in January 2000 to over 2000 contracts now and open interest has climbed to 85,025 which represents approximately 10% of total Euribor Option open interest.

LIFFE's Deputy Chief Executive, John Foyle commented, "As users of LIFFE CONNECT™ enjoy unparalleled levels of speed and functionality they are discovering the attractions of trading mid-curve options. Market participants are using mid-curve options to manage longer dated exposure at a lower cost than through traditional options and are simultaneously capturing greater volatility and increased trading opportunities."

An active market participant in the Euribor Mid-Curve Option is Tradelink Worldwide Ltd. Norman Shanker, Head Trader at Tradelink commented, " The level of interest in these products has exploded since we have moved onto LIFFE CONNECT™. Customers now realise that this is a liquid, two-way market and we see trading opportunities and volume increasing from one day to the next."

LIFFE will nurture this growth and develop this market to its full potential so as to maximise the synergy with LIFFE's traditional options and provide market participants with a range of option contracts to efficiently manage their short-term interest rate exposure.