GFI boosts coal derivatives team

US interdealer broker GFI Group has expanded its Newcastle free-on-board (FOB) coal derivatives coverage in London and Singapore. The Singapore desk has been set up to complement the company’s growing physical coal broking business in the Asia-Pacific region.

GFI’s precious metals broker, Katherine Saw, has moved from Sydney to London to strengthen the coal desk there. She will work closely with the Singapore coal desk. The Singapore desk is headed by Fergus Duncan, another internal appointment, with 18 years’ broking experience in London, Singapore, Sydney and Tokyo. Both appointments will contribute to the development of the Newcastle FOB derivatives market in Asia and Europe, said GFI.

Newcastle FOB swaps, based on Australian production, are seen as an efficient way to manage basis risk, said Steve McMillan, GFI’s European senior managing director. He added that in due course, the firm expects east Asian traders to tap into the liquidity that should develop.

Saw said the Newcastle FOB swap contract is not so well established as contracts based on the Argus/McCloskey API 2 and API 4 indexes, but she added that volumes in the swaps have been growing exponentially this year.