By the late 1990s, Chicago's futures exchanges were under pressure.
They were no longer the most modern in the world. Although both the CBOT and CME had introduced screen-based trading systems for after-hours activity, the influence of the local traders on each exchange ensured that most trading was still conducted by open outcry in the pits.
Efficient, cost effective screen-based trading technology enabled exchanges in continental Europe, led by Deutsche Terminbörse (DTB), to increase turnover and market share. LIFFE, chastened by the loss of its benchmark 10-year Bund futures business to DTB during 1997, announced in March 1998 that it would switch most contracts to screen-based trading in 1999.
Away from the exchanges, more and more derivatives were being created and traded OTC in a global market place. The 1993 G30 report, which focused exclusively on OTC derivatives, had caught the trend. Whereas turnover of exchange-traded derivatives and OTC products grew in parallel between 1987 and 1992, OTC activity expanded significantly faster after 1993.
The US$4.45 trillion notional amount of OTC derivatives outstanding at the end of 1991 was about a quarter higher than the equivalent US$3.52 trillion total for exchange-traded derivatives. By the end of 1998, the notional amount of OTC derivatives outstanding was US$51 trillion – nearly four times the $13.55 trillion notional amount of exchange-traded instruments ...