[an error occurred while processing this directive]
BBC News
watch One-Minute World News
Last Updated: Wednesday, 6 April 2005, 19:43 GMT 20:43 UK
London traders plan to survive in Dublin
By Ben Richardson
BBC News business reporter in Dublin, Ireland

Open outcry trader on the London IPE
The pit traders will not go quietly
Lee Vandermolen and his colleagues look like ordinary tourists as they walk through Dublin's international airport.

But for the gas oil traders of KCM Energy the trip is no holiday; it is the first of many long-distance commutes that will determine whether or not their way of doing business survives.

The four men are open outcry traders and spend their days face-to-face with rivals, jostling for position in the crowded pit of London's International Petroleum Exchange (IPE).

A day at the office goes by in a blur of multicoloured jackets, hand signals, and shouted orders.

Way of life

That is all set to change after the IPE ends open outcry trading on Thursday and switches to a fully electronic system of buying and selling oil and gas oil futures contracts.

The pit will be replaced by computer screens, and critics insist the changes are unnecessary and will lead to the loss of jobs.

The screens will still be there in six months time
Lee Vandermolen, KCM Energy

"Trading volumes have been rising year after year," says Mr Vandermolen as he queues to go through passport control. "It's not as if the market isn't making money. Why fix it if it isn't broke?"

The open-outcry traders are not the type of people to take things lying down - just ask the Greenpeace activists who were left bloodied and bruised after a recent attempt to storm the IPE pit - and have promised to fight on.

At least 140 traders and market makers from London and the US, including Mr Vandermolen and his team, are planning to relocate to Dublin and work in a rival pit set up by the New York Mercantile Exchange (Nymex).

Tough times?

The plan is simple - they want to show that there is still a strong demand for open outcry trading and then move back to London when Nymex gets regulatory approval for a new exchange in the capital.

"We will give it a go and if it works, we will continue with our way of life," Mr Vandermolen explained, sipping the cola he prefers to beer. "If it doesn't? Well, the screens will still be there in six months time."

There is no doubting the traders' commitment to the cause.

Traders on the Nymex floor in Dublin
Nymex is racing to get ready in time

Mr Vandermolen and five other colleagues will be working shifts and sharing a two bedroom apartment, jetting back and forth between London and Dublin every five or three days.

Families will, for now, come second and for the six months they plan to be in Dublin the traders will not run their own accounts but instead pool their resources.

Working conditions are not going to be as plush as they were in London, especially after the IPE brought forward its plans to end open outcry.

In the lead up to Thursday's big change, there is a ramshackle feel to Nymex's Dublin trading pit, with panels missing from the ceiling and air conditioning vents snaking their silver way through a mass of wires.

Newly-arrived travel bags are dumped in corners, as their owners pick their way through computer equipment and head for the small trading floor.


"This feels just like what it is - a stopgap," says Mr Vandermolen.

Traders on London's International Petroleum Exchange
Dublin has a long way to go before it matches London or New York

Nymex says everything will be in place by Friday and that the exchange is ready to cope with the influx of traders from London and the US.

"I've seen worse pits," a Nymex official says after climbing out from underneath a desk. "Nothing is ever smooth, although you want it to be."

"If we get the volume, we should be OK."

Nymex's Dublin exchange will offer two main contracts - one for Brent crude oil, the benchmark for most of the world's oil traders, and one for gas oil, which is essentially the same as diesel and heating fuel.

Despite all the optimism that demand is there and assurances from clients that they will still choose the human face instead of the computer screen, there are concerns that not enough business will come through the exchange.

Critical mass

To keep liquidity and interest up, Nymex is offering expenses of roughly $1,000 a week per person.

They also are offering to pay a stipend of as much as $100,000 a month to market makers - those firms or people willing to buy and sell to keep things ticking over.

Oil traders in the Nymex pit in Dublin
Have we seen the back of open outcry trading in London?

That may seem a lot of cash, but in a volatile and illiquid market where getting in and out of positions is difficult, that money can be gone in the blink of an eye.

With the closure of the IPE in London looming, business in Dublin is quiet.

Traders stroll in and out of the pit, making offers, calling out bids, though significant activity is limited to sporadic, albeit noisy, flurries.

Talk often turns to the subject of who, and how many others, will turn up on Friday, the bravado of the pit unable to cover up the concerns about what the next few months will hold.

"Of course we'd rather be in London," one KCM Energy trader admits. "No one likes to leave their family behind, but what else can we do?

"I've been doing this almost all my working life. It's what I know. I don't fancy sitting in front of a computer in an office."

Those decamping to Dublin are betting that their clients also will prefer the human touch and are expecting volumes to jump after Thursday.

The outcome is difficult to call, but one thing is certain; no matter what happens, the traders are not going to go quietly.

Open outcry trading to end on IPE
06 Apr 05 |  Business
Nymex launches Dublin oil trading
01 Nov 04 |  Business
Oil prices surge to new records
01 Apr 05 |  Business

The BBC is not responsible for the content of external internet sites

Has China's housing bubble burst?
How the world's oldest clove tree defied an empire
Why Royal Ballet principal Sergei Polunin quit


Americas Africa Europe Middle East South Asia Asia Pacific