One of the longer-term trends taking place among interdealer brokers is their evolution into mini exchanges as they advance their electronic platforms. Leveraging their existing voice-based broker-to-customer relationships, they launch or acquire electronic marketplaces in asset classes where they have leading positions in the market. This trend intensified starting in 2013 with the advent of mandated swap execution facilities (SEF) in the US to create centralized platforms for trading swaps.
Overall, the larger a customer base of users on the platform becomes, the greater liquidity and product offerings for each electronic marketplace. As a result, the trend has pushed interdealers to expand into different product types through both organic growth and acquisitions to better position their overall marketplace. The prospects of exponential growth via adding additional customer bases is behind the recent bidding interest for GFI Group by both BGC Partners and the CME Group.
Adding to the expansion trend, Tullett Prebon Information (TPI) has announced today a pair of data distribution deals of exotic product prices on the platform. In an exclusive deal with SCB Group, Tullett Prebon Information will begin to distribute price on biofuel, ethanol and palm oil data.
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Seperately, TPI has signed an exclusive deal with Numerco First to distribute nuclear-fuel pricing. SCB Group is a leading biofuel broker while Numerco is an independent supply agent of nuclear fuel.
The two deals represent the growing commoditization of non-fossil fuel energy products, which the market has grown large enough to require consistent quality standards and pricing structures of. According to TPI in their public announcement, the automotive biofuel market is expected to grow from $94.61 billion in 2013 to $149.25 billion in 2018. The distribution of pricing data helps users establish reference points for their future buying of the commodities as well as valuing their existing inventories.
Kevin McGeeney, CEO of SCB Group, commented about the deal: “As one of the world’s leading biofuel brokers, we are confident that the reliability and breadth of our data is unparalleled. Now, thanks to the deal with TPI, this high quality information can be made available across the planet, to the advantage of market participants.”
Scott Lawrence, managing director at Numerco, stated, “The nuclear fuel sector is an illiquid yet crucial market that has become increasingly commoditised in recent years. Although the regularity of pricing data updates has improved significantly, there has simply been no way for most firms to get high-frequency information. Delivering our data through TPI in real-time will give organisations an enormous advantage.”