Citicorp In Global Review Of Futures Desks

As speculation swirled in London markets about the fate of the Citifutures arm of Citicorp, the company said that it was specifically reviewing whether it requires its own execution and clearing capabilities. We have 150 people over New York, Chicago, London, Tokyo and Singapore, a spokeswoman for Citicorp in London said.

She said 39 were posts in London. The review process could continue until the end of the year, the spokeswoman said. She said Citicorp had been involved in the futures business in London for 12 years.

Traders on the LIFFE (the London Financial Futures & Options Exchange) floor said the announcement had sparked concerns the company was likely to pull out of the futures business altogether.

 

You have to be concerned when a company comes out and says this sort of thing, said a floor trader at rival firm. A lot of the guys will be starting to line something else up, he added.

But traders said the line at the Citifutures booth on LIFFE was business as usual.

A spokewoman for LIFFE said the exchange has not been informed that Citicorp has made a decision to close the operation. As far as we are concerned, they haven't actually made a decision, the spokeswoman said. They will continue their operations on LIFFE as usual, she added.

She said that the position of LIFFE's chairman, Jack Wigglesworth, who is also marketing director of Citifutures, was unaffected by the review.

Wigglesworth was elected to the post in May 1995, and was re-elected in May 1996. LIFFE chairmen typically serve three years, LIFFE said.

Traders said the recent squeeze in commission rates for brokerages has led many companies to question whether the costs involved are worth it.

Clients are pushing down the amount they are prepared to pay brokers, which has resultedin a highly competitive market.

There are more and more competing brokers falling over themselves for business, said an options broker at LIFFE. It's expensive to run a good floor team that can cope with the peaks and the troughs in activity.

Traders said a strong team needs about eight to 10 players, with three or four traders and four staff in the booths at the side of the pits. Traders can command yearly salaries of about