Please find attached the above article from the Rueters English News Service, October 12, 2001.

UK: INTERVIEW-Metals screen trade set to evolve - Spectron.
By Andy Blamey

10/12/2001
Reuters English News Service
(C) Reuters Limited 2001.

LONDON, Oct 12 (Reuters) - Electronic trading of base metals futures has established a firm foothold in the market but the nature of online trading platforms looks set to evolve further, says Gavin Gross, head of LME metals at Spectron Futures Ltd. 
UK-based energy and commodities broker Spectron's electronic platform for the trading of London Metal Exchange (LME) contracts has become required viewing for traders alongside the LME's own system LME Select and the Enron Group's EnronOnline.
"I think we've proved that people will trade LME derivatives contracts online, because there are some great advantages to doing so," Gross told Reuters in a telephone interview. 
"And unlike the physical markets, where things haven't really taken off online, all three platforms are pretty much indispensable to the market." 
Both Spectron and LME Select are neutral platforms in which Category 1 and Category 2 LME members trade with each other, while EnronOnline is open to a wider membership but has Enron itself as the sole counterparty in each transaction. 
This leaves a gap in the market for a multi-party trading system open to industry participants beyond the immediate trading community, Gross suggested. 
"I think the clear trend for metals derivatives trading for the future is for open platforms which would allow dealers and clients in the market to interact with each other online," he said. 
Direct access for clients to an electronic trading environment could mean changes in the role of the broker, he said. 
"Clients will have the advantage of more control, more visibility and more transparency in what they do. However, they'll have to pay for services," Gross said. 
"You could see a situation where dealers specialise in different areas - certain dealers would provide credit functions, certain institutions would provide clearing, others would provide execution and certain companies would provide market-making." 
DIFFICULT CONDITIONS 
Difficult market conditions are already forcing metals traders to rethink their activities; this week alone has seen N.M. Rothschild & Sons exit base metals trading and both Bank of Nova Scotia and Enron looking to scale back. 
"On the LME now you've got low volumes, falling volatilities, falling prices and we're in the grips of a bear market. It's very, very poor for business in general," Gross said. 
"There are too many dealers around chasing a shrinking amount of business...Each company is going to have to look very carefully at their business and their staffing levels." 
Spectron has not been immune from declining volumes. 
"Our volumes for the first 12 months of operation were fantastic, way beyond what we had expected. However, our volumes have fallen in the recent quarter," Gross said. 
"That's due to two factors: first, the overall market activity is lower, and second LME Select has managed to attract some of the business that we would previously have had 100 percent of." 
The company is now looking at ways to further develop its trading platform. 
"We're beginning to investigate ways to add certain features and do things differently. That might involve creating an alternative platform where clients could access prices and thereby widen the service," Gross said. 
But, he stressed, "we have to keep the interests of our dealer clients foremost." 
UNCERTAINTY 
In the current environment, the LME's refusal to throw its weight behind either open-outcry floor trade or its new screen system - the exchange has taken pains not to express any preference and to "allow the market to decide" - may prove to be counterproductive, Gross said. 
"By having two systems running side by side ... the exchange is almost moving in two totally different directions," he said. 
"There's a feeling that the ring is doomed, which doesn't do anything to encourage its use, while the reluctance to fully back electronic trading means that you're still only seeing a trickle of business going through Select in terms of overall volumes." 
While preferences vary in different sectors of the market, the current uncertainty is helping no-one, he said: 
"Metals traders just want to trade. They just want to know with some kind of certainty how the market will be structured in future so they can structure their business to support that and make money."