The Story of 542 Digital and the First Gold ETF Launch

In the early days of 542 Digital (then known as CFP Solutions), we were brought into the world of gold by one of our clients to assist with the production of an online petition in support of their ‘Hold on to our Gold’ campaign, protesting Chancellor of the Exchequer Gordon Brown’s sale of 395 tonnes of the UK’s gold reserves.

By 2003, we found ourselves involved in an historical event for gold, the creation of the first gold-backed exchange traded Fund [ETF].

Gold at that time was trading at a multi-decade low (around $275 per Oz) and, despite its historical and symbolic significance, its beauty and its multiple scientific and technological applications, the yellow metal seemed a poor choice for investors.

Around 2001, the gold price saw signs of recovery, but investors had limited and often complex options for investing in gold.

The concept of listing gold on stock exchanges had been a twinkle in the eye of many industry insiders for some time, but it was Australian businessman and philanthropist Graham Tuckwell who led the way in devising a plan to list shares that represented an interest in physical gold.

There were many financial and regulatory obstacles to negotiate, but in early 2003 the first gold-backed ETF, Gold Bullion Securities ‘GOLD’ was launched on the Australian stock exchange.

The next step was to launch a similar product ‘GBS’ (a physically-backed gold exchange traded commodity [ETC]) on the London Stock Exchange [LSE] and 542 was tasked with the design and build of the product website to go live in December 2003. This product ran into regulatory challenges and was restructured and relaunched in March 2004, a testing time for us as we had to pull and then revamp the website quickly to enable the product.

At that time, the introduction of gold Exchange-Traded Funds (ETFs) was widely considered revolutionary in the world of investing. It also represented a turning point for 542. A key component of the product site was the need for the timely publication of product and market data. We quickly expanded our resources and expertise in the area of data management as well as our understanding of the regulatory requirements of the ETF arena.

Following the success of that project was the development of a product website for what was to become the world’s largest gold-backed ETF, which launched on the New York Stock Exchange on November 18, 2004.

The website and the data management system underpinning it were developed over the course of 2004. The market data, ingested from multiple sources and in various formats, was then archived, validated and processed, and users presented with intraday and historical performance data in an accurate and timely manner.

In the 25+ years since our first foray into the gold markets, we have become leading experts in financial data, analytics, monitoring and modeling. Every day we take in terabytes of data from multiple sources and apply complex analytical methodologies to build user-friendly software tools that deliver quality insights to vendors, trading desks and market analysts worldwide.

Since 2004, our team has expanded tenfold from 4 to over 40 developers, designers, analysts and operations. In that same period, since the emergence of exchange traded gold products, the gold price has also increased tenfold from ~$400 to ~ $4000 per ounce, a coincidence and a correlation for which we take no credit but a revolution in which we are proud to have played a small part.