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Commodities Sales & Trading Market Update – February 2015

Date: 10 February 2015

The drop in commodity prices, particularly oil, has dominated the news over the past few months. Decreasing prices across the market have been further influenced by the continued low growth of the Chinese economy.

Various investors and trading houses have been storing large quantities of assets with the hope of selling at a later date at more favourable prices. Forecasts predict this will lead to a considerable low period, before overall prices increase and the market fully recovers.

In terms of overall performance, the end of 2014 saw mixed reports. Several hedge funds closed their doors whilst banks looked to capitalise on major withdrawals seen throughout the course of the year. Those still looking to increase their coverage included Citi (buying the Deutsche Bank energy and metals books), Macquarie (rumoured to be in talks to acquire the Jefferies trading unit following a strong 2014 performance) and BTG Pactual (announcing that commodities already contribute to a third of their sales and trading revenues; despite closing their newly developed hedge fund recently).

In Switzerland, the dramatic rise in the value of the Swiss Franc caused increasing costs for many of the country’s commodity trading houses, adding to existing tax and regulatory pressures. This could have a significant impact on the levels of total compensation the Swiss trading houses are able to pay in the next 12 months.

Comms -update

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