Open-pit oil trade back in London

'Open outcry' oil trade - in which brokers communicate with traders via a mixture of shouted commands and hand signals - had ended in London in April.

This followed rival firm International Petroleum Exchange's decision to conduct all trading electronically.

Traders said the new exchange gave firms options on how to do business.

Head to head competition

Nymex has been trading Brent crude contracts on an 'open outcry' basis in Dublin since last November.

However, the US company decided to switch the trading floor to London - where the European petroleum market is based - once it had obtained regulatory approval from the Financial Services Authority.
The firm said its decision to introduce pit trading in London was based on customer demand.

"It brings head to head competition to another trading floor and competition is always healthy," Mitchell Steinhause, vice-chairman of Nymex Europe, told Reuters.

"For many of us, open outcry is a way of life. It's our blood."

Level playing field

Nymex said that 59 traders had registered for Monday's launch and that interest in the new exchange was growing.

The IPE switched to electronic trading earlier this year in the belief that the move would reduce overheads and boost trade.

In July, it generated record daily trading volumes of 184,144 contracts, higher than the 181,182 peak recorded in physical trading in September 2004.

Volumes on Nymex's Dublin trading floor peaked at 24,152 daily lots in April before falling to about 4,600 lots currently, according to Reuters.

Traders said regulatory approval was likely to boost interest in the Nymex market.

"What we have got now is a level playing field where clients can trade electronically or open outcry," Steve Lambert, a trader with BNP Paribas, told Reuters.

"I would say that by the end of the month, we will know whether it can work."

The London Metal Exchange is the only other commodities market in London still featuring face-to-face trading.