Managing financial risk
A London International Financial Futures and Options Exchange case study

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Page 5: Traders

London International Financial Futures And Options 2 Image 2Open outcry, as it is known, is a traditional method of trading, which combines the use of shouting and hand signals. Most of the business conducted at LIFFE is carried out this way. Every trader in the pit can be thought of as an auctioneer, each announcing his or her bids and offers to indicate willingness to trade.

There are many conventions in open outcry trading, including the order in which the words of the quotes are said and how the hand signals are made. Prices are generated simply by supply and demand and so are adjusted according to the relative balance between buyers and sellers. LIFFE lengthens the trading day by the use of APT or Automated Pit Trading, a computer based trading system designed to incorporate the methods and advantages of an open outcry market place.

London International Financial Futures and Options Exchange | Managing financial risk