Research Proves SYCOM® A Successful Replacement For SFE Floor

Academic research commissioned by the Sydney Futures Exchange (SFE) has concluded that SFE's screen trading system, SYCOM® IV, facilitates higher levels of liquidity than the previously utilised Trading Floor. The research, conducted by the Sydney-based SIRCA Futures Research Centre, analysed trade and quote data of the spot month Share Price Index (SPI®) futures contract, for the 30 days before and after the switch from Floor trading to screen trading on 4 October 1999. Mr Leslie Hosking, SFE Chief Executive, said: "The spread between the best bid and the best offer in the SPI® contract after moving to screen on 4 October 1999 is tightened dramatically. As the performance of the bid/offer spread is the accepted measure of continuous liquidity of a market, the conclusion can be drawn that the quality and efficiency of the SPI® has improved since its move to SYCOM® IV on a full-time basis. "We have additional research that demonstrates that electronic markets react to information much faster than their equivalent floor markets. This research has been done on the Chicago S&P futures contracts traded on both the floor of the Chicago Mercantile Exchange (CME) and on the CME's Globex electronic market." SFE continues to receive enquiries from its customers regarding the efficiency of its advanced SYCOM® IV electronic trading platform as compared to its highly regarded Trading Floor. Mr Hosking added: "Our ongoing research is clearly demonstrating that distinct market efficiencies are achieved via electronic trading with no loss of liquidity." SFE will close its Trading Floor and move all its interest rate contracts to screen on Monday, 15 November. SIRCA Futures Research Centre is funded by SFE and the Australian Government through a collaborative Australian Research Council grant. It has been conducting research on behalf of the Australian derivatives industry for three years under the direction of Dr Alex Frino, an Associate Professor of Finance at the University of Sydney. The Centre has had material published in many influential international journals, such as the US-based The Journal of Finance and the UK's The Journal of Banking and Finance.