Derivatives startup Gmex spins off exchange business


According to a statement on October 20, Gmex will split into two companies: Gmex Group, which will provide a range of technology, strategy and consulting services to financial firms; and a renamed exchange business that will continue to be part-owned by Deutsche Börse.

London-based Gmex was established in 2013 and is led by Hirander Misra, one of the founders of Chi-X Europe – now Bats Europe. Misra will lead Gmex Group, a business he will majority own along with other individual shareholders.

The renamed exchange business will be chaired by Sandy Broderick, a former senior executive at the DTCC.

Gmex came to market with a novel derivatives contract known as a constant maturity future, which was designed as a cheaper alternative to swaps for hedging against interest rate moves. The group also has a range of other business, including a technology arm, and secured backing from Deutsche Börse’s Eurex derivatives franchise in 2014.

However, Misra told FN that Deutsche Börse’s investment was always targeted at the exchange and that the restructuring would help the German exchange concentrate on growing that side of the business.

“The idea was always to get the technology side to seed the exchange, with some additional investment from Deutsche Börse, and then look to separate the two when both businesses expanded,” Misra said.

He added the new Gmex Group revenues were around $ 3 million for year ended June 2016, but are expected to be in excess of $ 10 million this year.

Misra said the technology side of the business had seen strong growth in recent months, having signed deals with firms ranging from interdealer broker Tullett Prebon to the Hanoi Stock Exchange in Vietnam.

In February, Gmex also provided its technology and invested in the Chicago-based Seed Commodities Exchange, which will be one of the first bourses to list contracts based on agricultural hemp.

Misra said: “There is a lot of growth in emerging markets, but investing in it usually involves some equity and revenue-share, so returns take a while to come to fruition.”

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