Page 4: How LIFFE works
A client (such as a Building Society) wishes to buy or sell futures or options and telephones his/her broker, a member of LIFFE. The broker contacts his/her booth on the LIFFE trading floor with his or her client’s instructions. The order is received in the booth and time stamped and dated. The pit trader is given the information either by hand signals or by written order from the booth clerk. It is then offered verbally to other traders in the pit.
The first trader to respond by calling, for example, “Buy 10” or “Sell 10”, becomes the counterparty to the deal. The broker then informs his or her client that the order is filled. Both parties then input the trade details into the matching system. Matched trades are passed to the clearing house which acts as a central counterparty.