Liffe debuts Schatz contract

The London International Financial Futures and Options Exchange (Liffe) says it is pleased with the turnover of its two-year Schatz German government bond futures contract which debuted yesterday. There were 16,020 Schatz lots traded on the exchange, capturing 8.4% of the market, according to a Liffe spokesman.

Although volumes for the new contract were only a small proportion of Eurex's Schatz contract, which has had a daily average turnover of 435,000 in June so far, Liffe’s contract is double the value of Eurex’s, at €200,000.

Eurex's Schatz was at the centre of controversy in April last year after an unnamed bank bought up the entire supply of the December 2003 contract, boosting its price and forcing short-sellers to pay dearly to borrow it on the repo market. Liffe says that any such abuse of its own contract would be severely punished.

“Anyone that is suspected of such market abuse will be brought before a disciplinary panel and will be fined a maximum of €250,000 per lot,” the spokesman told RiskNews.