Minneapolis Grain Exchange And ePIT, Inc. Explore Launch Of First Internet Futures Exchange

The Minneapolis Grain Exchange (MGE) and San Francisco-based ePIT, Inc., announced today that they have agreed to negotiate an agreement for a joint venture to launch an Internet trading system for commodities. The MGE board of directors unanimously approved the move at its long-range planning meeting on September 25. For the past year and a half the MGE, like most commodity and stock exchanges, has been looking at ways to embrace the next generation of trading technology. Its board of directors considered several proposals for a "black box," proprietary, screen-based trading system, the type of which has been embraced by many of the large exchanges, but it concluded that investing in such a system would be cost-prohibitive and not fully meet its business development and trading requirements. The MGE instead chose ePIT's system, which provides Internet-based electronic exchange technology for direct-access trading of securities and commodities. Subject to the approval of the Commodity Futures Trading Commission, the MGE will be the first U.S. self-regulated board of trade to use the Internet to operate a virtual trading floor with global reach. "MGE and ePIT share the same vision - utilizing a cost-effective, scalable, robust electronic trading system that can be accessed directly by pre-qualified participants around the world," said James Lindau, president and CEO of the Minneapolis Grain Exchange. "Trade matching and clearing will occur instantaneously and pre-approved credit and trading limits monitored continually. We believe this is the wave of the future in electronic trading." He added that the MGE and ePIT have been discussing a joint venture since April. "ePIT's electronic exchange facility marries the best features of electronic trading - open access, speed, efficiency, accuracy, and low trading costs - with the immediacy and transparency and direct trader-to-trader interaction of an open outcry marketplace," said ePIT Founder and President Richard Friesen. "Under the aggressive leadership of Jim Lindau and the unanimous support of the MGE board of directors, we are thrilled to develop ePIT to its full potential with the MGE." In the process of developing this joint venture, MGE will explore ways to create a for-profit trading group that would include its minor contracts, new contracts and contracts that become possible on an Internet exchange. Preliminary plans are to leave the flagship hard red spring wheat contract as an open outcry auction traded within the existing not-for-profit MGE. Also retained with the not-for-profit entity would be regulatory functions, clearing operations and sufficient revenue streams to support them. The Minneapolis Grain Exchange, established in 1881, is the only market for hard red spring wheat, white wheat, durum wheat, black tiger shrimp and white shrimp, and on-peak and off-peak Twin Cities Electricity futures and options. More information about the MGE can be found on its web site at www.mgex.com. ePIT, Inc. was incorporated in California in 1998. Its technology has been under development for two years and is operational for cash markets and will be operational the first quarter 2000 for regulated markets. ePIT's Internet exchange services support a wide range of securities, futures and non-regulated markets. ePIT provides a migration path to the Internet for exchanges, established and emerging cash markets, brokers, FCMs, floor traders and locals. Additional information about ePIT can be found on its web site at www.epit.com.