GFI Group’s e-commerce platform, GFI Net, has recently completed a $27 million round of financing and is now in the process of launching a range of online exchanges, online auction, and data and analytics publishing platforms for derivatives, emerging markets, energy and telecommunications, reports Michael Gooch, chairman and CEO of GFI Group and GFI Net in New York.
GFI’s new investors include Argonaut Private Equity Management, Gamma Investors, Access Technology Partners (Chase H&Q) and Brown Brothers Harriman.
Gooch explains that there are a number of vertical markets within GFI Net: GFI Net Equities, GFI Energy Net, GFI DerivaNet and GFI Credit Net for credit derivatives. “Credit derivatives stand to replace cash fixed income for pricing new issues, so our plan is to use the Internet to capture interested users of that data,” says Gooch.
“Our plan for GFI Net is to become a financial portal that is open to online exchanges amongst market markers, and online auctions amongst both market makers and end users, such as corporates and fund managers, who can access data and analytics via our Web site,” says Gooch. “Over the longer term, we want to provide end users with pricing and execution in all products via the Internet, using a patented auction system, RFP (Request for Price), which will enable end users to access multiple market makers and request pricing for specific instruments.”
GFI Net already has an emerging market equities platform up and running with about 20 users. The service is fully Internet enabled, but can also run over a private network. The brokerage is also live with GFI Net Analytics (www.gfinetanalytics.com), which provides real-time FX and precious metals options calculators that are based on push technology, so users have immediate access to prices.
The company is a few weeks away from entering internal beta tests for a new currency derivatives platform, which is due to go live towards the third quarter, when it will be rolled out to market makers.
Meanwhile, GFI owns 49% of Commerex.com, an Internet exchange for telecom minutes. “We have created a standardised contract, clearing and settlement through Brown Brothers Harriman, and through central switching, so carriers can trade anonymously with each other,” says Gooch.
Gooch says GFI is also looking to build a straight-through processing capability, which will adopt a standard protocol.
“We plan to take advantage of the fact that we will have both buy and sell side users on the same platform,” says Gooch. “We intend to streamline costs for market makers by using the Internet to eliminate their need to run big sales desks, because revaluation, analysis, price discovery and execution will be provided live over the Internet.”
GFICreditNet will provide valuable credit derivative data and analytics via the internet. Additionally, GFICreditNet will private label New Issue Auctions by capitalising on the distribution model that the users of this data provide.
“We are not going directly to the issuer, we want to be e-managers to provide Internet distribution,” he adds.