End of an era at the IPE

MORE than 250 traders at one of the City's most colourful institutions face an uncertain future tomorrow as the curtain comes down on open outcry in the pit at the International Petroleum Exchange.

Commodity brokers have already begun axeing jobs ahead of the wholesale switch to electronic trading of Brent crude oil futures contracts on Friday morning.

Almost a third of the staff linked to the pit - floor traders and phone brokers - are expected to lose their jobs immediately. Dozens are expected to try their luck at the Dublin exchange set up by New York's Nymex.

Brent crude futures began trading at the IPE 17 years ago and now 100,000 lots are bought and sold every day - the equivalent of the cargo of 200 supertankers. Some 80% of the world's oil production is hedged against Brent.

The launch of all-day electronic trading at the IPE marks the end of an era for a workforce best known for their stripy jackets and feverish hand gestures. Some earn up to £70,000 a year.

They hit the headlines two months ago after fighting off Greenpeace protesters who broke on to the IPE floor. One campaigner said the traders were more aggressive than the Texan Swat team at Esso. Rob Laughlin, broker at Man Financial, said: 'It's been a fairly horrible few days for many people. A lot of companies have already put people on redundancy notice. But we are a service industry so we have to change with the market.'

The IPE, like the London Stock Exchange and Liffe before it, believes that the future is electronic and that it could lose out to exchanges such as Eurex, Euronext or Nymex, if it doesn't move with the times.

The IPE began its switch in November, making its morning session electronic before switching to open outcry in the afternoon. It announced plans for a complete transfer in February.

Many traders prefer the open outcry method, arguing that it also generates more liquidity for the client. However, volumes have been creeping up in morning sessions, often outweighing post-lunchtime trading.

Supporters claim that it is cheaper and more efficient, and that it gives everyone access to the same information at the same time.

Christopher Bellow, a broker at Bache Financial, said: 'It's the end of era but, given that everybody has had a chance to use electronic systems for a good half of the day for the past five months, it means it shouldn't be too difficult to move over.'