London International Financial Futures and Options Exchange (LIFFE)
The London International Financial
Futures and Options Exchange (LIFFE) was established in 1982, following the removal of foreign exchange
controls in the United Kingdom.
The creation of LIFFE initially offered
market participants a better means of managing their exposure to both foreign exchange and interest
rate volatility. LIFFE has since developed a diverse range of financial instruments (known collectively
as derivatives). These products can be categorized under the following headings:
Short term interest rates (STIR's)
LIFFE was originally set up as a financial futures and options exchange. In its first ten years it
offered contracts on interest rates denominated in most of the world’s major currencies.
In 1992 LIFFE merged with the London
Traded Options Market (LTOM), adding equity options to its product range. In 1996, it merged with the
London Commodity Exchange (LCE), and, as a result, a range of soft and agricultural commodity contracts
was added to its financial portfolio.
Trading on LIFFE was originally conducted by ‘open outcry’. Traders would physically meet in the
Exchange building to transact their business. Each product was traded in a designated area or “pit”,
where traders would stand and shout the price at which they were willing to buy or sell. In 1998, LIFFE
embarked on a programme to transfer all its contracts from the traditional method of trading, to an
electronic platform, LIFFE CONNECT®. Today this is the most sophisticated electronic derivatives
trading platform in the world.
LIFFE initiated a wide-ranging restructuring programme to address the needs of the wholesale market
customer, and at the same time meet the requirements of an increasingly technologically driven and
competitive marketplace. The first steps in this process were the launch of LIFFE CONNECT® in November
1998, and the reinvention of LIFFE as a commercial entity.
In February 1999, LIFFE completed the
second stage of its programme with its shareholders voting unanimously for a corporate restructuring,
providing LIFFE with the right framework to become a profit-oriented, commercial organization. To
achieve this. membership and the right to trade were split from shareholding, which simplified a
complex share structure. This enabled non-members and third parties for the first time to invest in
LIFFE purely for a financial return because, under the new structure, a shareholder was not required to
become a member of the market.
In June 2000, following the successful transition of all of its financial and equity futures and
options on to LIFFE CONNECT®, the Exchange announced its intention to become a market leader by
building two complementary businesses. These businesses were founded on LIFFE’s established skills and
expertise in running a successful exchange, and in developing the state-of-the-art technology of LIFFE
The Exchange continued to focus on the
core business of providing the products required to manage exposure to financial markets in a cost
effective, efficient environment. In parallel, a new technology business was set up to provide
technology and associated services to exchanges around the world.
In January 2002 the purchase of LIFFE by Euronext was completed. LIFFE’s focus on short term interest
rate derivatives closely complemented Euronext’s expertise in a range of equity products. The
derivatives businesses of Euronext and LIFFE have now been combined as Euronext.liffe.
Euronext.liffe is creating a single
market for derivatives, by bringing all its derivatives products together on a single electronic
trading platform, LIFFE CONNECT®. Starting with the Brussels and Paris markets in 2009, and continuing
with the transfer of the Lisbon and Amsterdam markets, the replacement of multiple trading venues with
a single market supported by a state-of-the-art electronic trading system will reduce costs for both
Euronext.liffe itself and its customers, and make cross-border trading easier and cheaper.
Learn How To Trade The Futures
A former pit floor trader with
over 10 years experience explains step by step everything you need to know to be a successful
futures day trader. No detail is left to chance as you will learn how to trade futures on LIFFE,
CBOT, Eurex, BUND, DAX, CME. Complete with trading training simulator and sample trading data.