When one portal shuts another opens

The news that, one of the first independent, multi-assetinformation and trading portals, has shut down has wide implications for online investment, at least in the short term.
Announced in September 1999, was an ambitious venture to create a one-stop shop for market information and trading of fixed income, foreign exchange, derivatives and other instruments. The platform aimed to give fund managers, chief financial officers and other investors a single point of access to the products and services of a range of financial institutions. was set up by Integral Development, a leading supplier of technology for derivatives trading and risk management. Always a technology innovator, the company developed a trading system based on Web technology in early 1999, initially with the aim of selling it to banks.
With the concept of institutional trading over the Internet beginning to emerge, Integral decided it would lead the way.
“We believed ecommerce was coming to the capital markets and we wanted to be the catalyst for that to happen,” says Harpal Sandhu, chief executive officer of Integral.
The company quickly signed up a number of sell-side partners, such as ABN Amro, AIG International, BNP-Paribas, Bank of America and Standard Chartered, to provide real-time pricing and other market information in addition to trading services. Sandhu also claims that they signed up thousands of fund managers, corporate treasurers and other buy-side firms, although the company did not release their names.
Although Integral initially planned to launch in December 1999, the project proved more complex than expected and it finally went live in June 2000. In the meantime, there was a proliferation of ecommerce project announcements, particularly in the fixed income and foreign exchange areas, with some platforms, most notably Currenex, beating to market.
Developments in online foreign exchange trading were to prove crucial for Like Integral’s platform, Currenex is independent (in the sense that it is not a bank-owned initiative), but unlike, Currenex focused only on foreign exchange. Because of this it was able to go live two months before its rival. It quickly gained liquidity, achieving an estimated $400m a day trading volume by August, according to Boston-based financial consultancy TowerGroup. Then in the latter half of 2000, two bank consortia announced foreign exchange portals - FXall, whose backers include Bank of America, Credit Suisse First Boston and HSBC, and Atriax backed by Chase, Citibank and Deutsche Bank among others.
These developments, coupled with the almost weekly announcements of specialist fixed income and derivatives platforms, caused buy-side firms to back away and adopt a wait-and-see attitude, says Sandhu, and failed to gain liquidity in its crucial early months. Then, somewhat to the market’s surprise, Atriax announced that it would be using Integral’s technology for its trading engine.
Rumours flew that the condition of the deal was that Integral closed, although both companies denied it. “Integral competed with the biggest and the best for the Atriax contract,” says Sandhu. “It shows how much of an asset our technology is that we won.”
Finally, in March Integral announced that it was indeed closing and would go back to building technology for others. But there is more to the story than a lesson that technology companies should stick to their knitting and not go try to run financial services portals. had a model that many believed was the ideal for financial e-commerce and which several commentators still believe will prevail in the long run.
First, planned to support a wide range of assets, offering buy-side firms a simple and efficient link to a choice of products and service providers. But critics say that this was its first mistake. “CFOWeb tried to boil the ocean,” says Karen Steele, vice president, marketing for Currenex.
Sandhu disagrees. “We already had the technology for all products that’s why we delivered it,” he says. “You have to remember that at the time we announced CFOWeb it wasn’t clear which products would be the first to gain traction in the ecommerce market.”
But the logic remains that a single portal offering a range of asset classes would make life easier for investment managers.Second, was independent. This time Steele and Sandhu agree.
“What we had in common with CFOWeb is that we are an independent platform and I think that resonates with fund managers and corporates,” says Steele.
Although the multibank portals such as Atriax and FXall are grabbing the headlines as they prepare to launch around the middle of the year, Currenex is also steaming ahead. Steele says its volumes are an order of magnitude greater than the $400m estimated last August (the company does not disclose official volumes).
According to David Gilmore, partner with New York-based Foreign Exchange Analytics: “Customers (of Currenex) say they like the system while the banks that are on it are complaining about the spreads and not winning business so the platform appears to be helping the buy-side.” is an early casualty of what will be an ongoing conflict in the overcrowded online trading market. Its experience suggests that bank-backed, single asset class platforms will prevail, but that may only be for the short to medium term. As fund managers and others experiment with the variety of platforms on offer and start to flex their buyers’ muscles, it may turn out that had the right model but at the wrong time.

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