GFI Group Inc

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GFI Group Inc.
GFI-logo email Small.gif
Founded 1987
Headquarters New York, USA
Key People Colin Heffron, President and CEO
Employees 1500+
Products Brokerage services, market data, analytics software
Website www.GFIgroup.com

GFI Group Inc. (NASDAQ: GFIG) is an interdealer broker that specializes in over-the-counter derivatives products and related securities. The firm also has applied to become a US futures exchange and filed an application to become a swap execution facility, to adjust to market reforms forged by the Dodd-Frank Act.

The company, founded in 1987, provides brokerage services, market data and analytic software products to institutional clients - investment and commercial banks, corporations, insurance companies, hedge funds - in markets for a range of credit, financial, equity and commodity instruments.

The company is headquartered in New York and has offices in London, Paris, Cape Town, Hong Kong, Seoul, Shanghai, Tokyo, Singapore, Sydney, Englewood (NJ), and Sugar Land (TX) and Mexico.[1]

In July 2014 the CME Group said they would buy GFI in a deal valued at $580 million, in order to acquire GFI's Trayport and FENICS businesses. The CME said it would pay $4.55 per share in CME stock for each GFI share. Following the acquisition, the CME would sell GFI's wholesale brokerage and clearing businesses to a private consortium led by GFI Executive Chairman Michael Gooch for $165 million in cash.[2] [3] Gooch is the controlling shareholder of Jersey Partners Inc., which holds a 36 percent stake in GFI.[4]

On August 29, 2014 shareholder Jamie Suprina sued GFI in New York State Supreme Court seeking to block the takeover, saying that the $4.55 per share price undervalued the shares and was the result of an unfair sales process likely driven by the interests of Gooch, other executives and board members.[5]

In October 2014 BGC Partners, a rival interdealer broker, launched a hostile $675 million takeover bid for GFI Group. BGC said it would offer to buy the 86.5 per cent of shares in GFI it does not own in a deal that valued GFI at $5.25 a share. [6] BGC currently owns about 13.5 percent of GFI.[7]

The bidding war between BGC and CME continued in January of 2015 as the CME raised its offer to $5.60 per share and BGC Partners shot back with a $5.85 per share offer.[8] Days later CME raised its offer again, to $5.85 a share in cash and stock, and BGC raised its all-cash offer to $6.10 a share.[9]

In January 2015, despite GFI founder Michael Gooch urging investors to support the CME Group’s proposal rather than BGC's “highly conditional" and "hostile" offer, [10] GFI shareholders rejected the CME proposal,[11] and in February, GFI’s board of directors agreed to accept BGC’s tender offer of $6.10 a share in cash. Based on 127.5 million shares outstanding, the transaction valued GFI at about $778 million.[12]

History

GFI Group received FX Week's award for Best Swap Execution Facility (SEF) in 2014.[13]

GFI Group received the FOW International award for Best Broker for the year 2013. [14]

On September 13, 2013, GFI's swap execution facility was granted temporary approval by the CFTC.

In March 2013, GFI Group filed with the CFTC to create a futures exchange called GFI Futures Exchange LLC. GFI said it is creating the new exchange to serve its clients' needs across all markets at a time when the regulatory treatment of futures and swaps under the Dodd-Frank Act is still unclear.[15] GFI also planned to register as a swap execution facility (SEF) under the CFTC's rules.

On Nov. 29, 2010, GFI was named Commodity Broker of the Year by Commodities Business Awards.[16]

On Feb 1, 2008, GFI announced it had acquired trading software company Trayport Ltd.. GFI said in a press release that Trayport had established a leading position in supplying software to the European over-the-counter energy markets including electric power, natural gas, coal, emissions and freight. Trayport's software had been installed on more than 10,000 trading screens worldwide, dealing in over 2,000 different trading instruments and supporting over 50 marketplaces across 15 countries. Trayport had estimated revenues of $28 million for their fiscal year ending Jan. 31, 2008. GFI paid approximately $164 million for Trayport. [17]

Products and Services

Its brands include GFI, Starsupply, GFInet, CreditMatch, ForexMatch, EnergyMatch, FENICS and Amerex Brokers LLC.

GFI provides voice brokerage services in each of the markets in which it operates. These are typically illiquid and more complex than the markets for more standardized financial instruments. In GFI’s less commoditized markets brokers use their position at the center of information flows to source the best price.

Since 1999, GFI has been deploying hybrid solutions in a number of markets by using online or electronic systems to support its voice brokerage operations in delivering efficient deal execution. GFI’s hybrid solution operates in many of its markets, including currency derivatives, credit derivatives, North American, European and UK electricity, freight derivatives, emissions and North American and European weather. These solutions are currently marketed under the names of CreditMatch[18], ForexMatch®[19], EnergyMatch[20] and EnergyMatch Europe[21].

GFI makes it its market data available through a number of channels including, streaming web portals, FTP file downloads, FENICS analytics and data vendors. Each channel is tailored to suit front, middle or back office requirements. Currently available data sets include: FX options, credit derivatives, European repo, European energy, emerging market bonds, North American energy.

GFI also sells FENICS[22], a derivative pricing tool which can be deployed to cover the FX, credit, freight or energy markets and is used as a front office platform for pricing and analyzing derivatives.

Key People

References

  1. Press Release. GFI.
  2. CME to buy GFI Group in $580 mln deal. Reuters.
  3. CME to buy GFI Group for energy and FX units. Reuters via Chicago Tribune.
  4. GFI Founder Gooch Tells Investors to Vote for CME Takeover. Bloomberg.
  5. GFI Group Shareholder Sues to Block CME Group Acquisition. Bloomberg.
  6. BGC Partners to Make Bid For Rival Broker GFI. The Wall Street Journal.
  7. GFI Rallied Before BGC Revealed Hostile Takeover Offer. Bloomberg.
  8. GFI bidding war heat up. The Financial Times.
  9. CME Group, BGC Again Raise Bids for Broker-Dealer GFI. The Wall Street Journal.
  10. GFI Founder Gooch Tells Investors to Vote for CME Takeover. Bloomberg.
  11. GFI Shareholders Strongly Reject The Proposed CME-GFI Management Merger Proposal. PR Newswire via MarketWatch.
  12. Howard Lutnick's BGC Wins Fight to Acquire Broker GFI. Bloomberg News.
  13. GFI Group Voted Best SEF by FX Week Magazine. GFI Group.
  14. GFI Group Receives Best Broker Award from Futures and Options World. GFI Group.
  15. GFI Group Files With Regulator to Create Derivatives Exchange. Bloomberg News.
  16. Commodity Broker of the Year 2010: GFI Group. Commodities Now.
  17. GFI Buy Trayport for $164 M. Institutional Investor.
  18. CreditMatch. GFI Group.
  19. ForexMatch. GFI Group.
  20. EnergyMatch. GFI Group.
  21. EnergyMatch Europe. GFI Group.
  22. Fenics. GFI Group.