(August 14) – “The Chicago Board of Trade, the US futures exchange, has told bond traders that it will ‘determine shortly’ whether there is any scope to reduce the six-hour period when its new electronic trading platform will not be available for bond derivatives trading, but ruled out retaining its existing screen-based system to cover this gap,” writes Nikki Tait in today’s Financial Times.
“The current system, known as Project A, is available about 22 hours each day.”
“In a letter to the Bond Market Association, David Brennan, CBOT chairman, said that ‘the best course of action’ would be to launch the new system, evaluate its performance and maintenance needs as quickly as practicable, and then make adjustments to the current batch-processing window. The envisaged six-hour shutdown is designed to allow for the full processing of orders transacted under the new system, the product of an alliance between the CBOT and the German-Swiss Eurex exchange.”
“Mr Brennan acknowledged that there was a need to balance ‘the highest level of system performance’ with ‘the needs of the marketplace’, and said another review of the time required for the processing was under way.”
“Traders are particularly concerned that the new system will be unavailable when the Toyko markets are open, meaning that a key price-discovery mechanism would be lost.”
“However, the CBOT chairman ruled out retaining Project A, saying that the same staff would be required to run both electronic platforms, meaning that it would be impossible to have them working simultaneously. He also pointed out that trading firms would face the same staffing problems, and that the logistics of transferring order books between systems every day would be ‘overwhelming’ “.