Online Futures And Commodity Trading With Professional Futures Broker
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What's happening in commodities markets, said Craig Pirrong, professor of Finance at the University of Houston, is that what used to be "in the floor trader's head" is now being computerised. Moreover, increased electronic trading is a spur for greater liquidity, as well as a catalyst to change the way liquidity functions. Ultimately, that means cheaper transactions. So hedgers and others are going to be able to execute orders at lower cost, a benefit to any market participant. Meanwhile, market participants themselves are changing too.
Castleton Commodities, which emerged from the energy subsidiary of the Louis Dreyfus Group, illustrates how trading firms might evolve. What makes them distinctive, said Pirrong, is that they provide "a marriage of private equity capital in a private ownership model". Castleton is sort of a hybrid model," he said.
Commodity trading houses are pit trading commodity brokers india against a backdrop of pit trading commodity brokers india world's open outcry trading floors getting shut down one by one, with the last remaining ring in Europe belonging to the London Metal Exchange. There is tremendous speculation that the ring will disappear.
But it appears that the LME is making plans to include designs for it as the exchange moves to new headquarters. When we move to our new premises, which will be the end of this year, or early next, we will have a new ring," said Paul MacGregor, head of sales at the LME. The LME did a review in and the market wants to keep it. Pirrong however, sees the ring as "important, but they keep it on more for tradition".
Pit trading commodity brokers india its continued use will come under renewed speculation with the news that JP Morgan plans to quit the ring.
Michael Camacho, head of commodities at JP Morgan said to the Financial Times that the move was prompted by shifting client preferences: LME trading, in the ring and electronically, involves 40 general clearing members, including some of the big investment banks, brokerage houses, and some "very unique metal-specific members who really only offer pit trading commodity brokers india to the LME," said the LME's MacGregor.
The primary base metals traded are: Minor metals contracts include cobalt and molybdenum. The LME has developed a volume-based rebate programme, and MacGregor is pit trading commodity brokers india out to traders who find that profits pit trading commodity brokers india hard to make in other markets due to monetary conditions or market saturation.
In energy markets such as gas, power, carbon and coal, trading is mostly executed via interdealer brokers, and is a 'highly electronic market place', screen assisted for more than a decade, according to Alex McDonald, CEO of the London Energy Brokers' Association.
In Europe, Pit trading commodity brokers india energy markets are traded on a hybrid system with voice brokers using pit trading commodity brokers india common aggregation software, such as Trayport.
In the less liquid products European energy markets are preparing for the next stage of REMIT Regulation on Wholesale Energy Markets Integrity and Transparencywhich has been pit trading commodity brokers india in force since the end ofbut will shortly witness detailed implementation. In early October, widespread reporting requirements will be introduced, as well as the imposition of much more prescriptive and firmer market abuse rules, said McDonald. The outcome will be market assurance and quality, but the impact of that is really in the reporting and in the post-trade, as opposed to radically shaking up the arrangement of liquidity," he said.
REMIT, he added, is providing energy markets with something that other markets don't have, namely, a "holistic" approach to product and a common set of reporting engines with utility product pit trading commodity brokers india.
Compare that to MiFID II regulation, which will divide the market by product, participants, geography, and most notably between physical forward and derivatives markets. Gas and power both trade as physical forward markets and have a very limited take-up of clearing. McDonald said the likely impact of the regulation would be to further fragment the market into types of users and products. This will mean that contracts not physically settled will pit trading commodity brokers india classed as financial instruments and reported and regulated under EMIR European Market Infrastructure Regulationwhich affects derivatives, central counterparties and trade repositories and has a stated aim of improving transparency as well as reducing risk.
Under EMIR, the competent authorities will become financial regulators as opposed to the bulk of the markets, which are overseen by energy ministries. One thing's for sure: Questions have been raised over access and intellectual property for traded instruments, when the underlying is a common utility: It could very well be the "next generation of technology" that empowers both participants and supervisors, but also solves problems inherent to the "very expensive, current discordant and overlapping" set of regulations, and the concomitant intellectual property pit trading commodity brokers india it produces, he added.
Therefore, participants cannot trade unless segmenting lots of cash collateral onto a centralised exchange and paying execution charges to get market access, data, post-trade processing and reporting," McDonald explained. One of the lessons of any regulation is that the big get bigger and the small struggle for market access due to increased costs. The debate going forward will be whether a distributed model will trump a centralised model, and what the common objectives are and who sets them?
Professor Craig Pit trading commodity brokers india, however, said that the situation is comparable to other advances that shook up markets. And within that, we are going to see evolution," he said. China is a growing market, with distinct characteristics. He explains that there's a partnership with local asset managers. We develop pit trading commodity brokers india trading system and then we can cooperate with various asset managers that operate the systems," he said.
Lockstrom added that there was regulatory change in China on almost a daily basis. China was on a path to liberalise markets, including opening up commodity futures markets to foreign firms. They have really backtracked on the development path that they originally embarked upon," said Lockstrom. He expected the long-term direction of liberalising markets to be resumed after some months as market conditions moderate. One of the reasons they have become members of the LME relatively recently is the demand of their customers in China to directly hedge on to the LME.
He also foresees India being a huge growth market, as well as Singapore and other Asian markets. Japan is a mature market, it has an enormous steel industry that needs to hedge the inputs to steel nickel and zinc. Australia has an enormous mining industry and very well-developed proprietary trading industry, and also managed money industry. The agricultural markets division of the Johannesburg Stock Exchange was founded 20 years ago.
From day one, the small derivatives exchange started off electronically, said Chris Sturgess, director of Commodity Derivatives at JSE. It enabled the pit trading commodity brokers india to connect member firms, particularly those accessing and then executing for clients from across the countryside. The most liquid and actively traded commodity is white maize, followed by yellow maize, soya beans, wheat and sunflower seed. These are cash settled contracts relying on their benchmarks. By the end of the year, the JSE is introducing two cash settled beef contracts and a partner arrangement with ZAMACE, a spot commodity participant in Zambia for listing Zambian contracts in white maize, wheat and soya to be traded and settled in US dollars.
In terms of doing business in Africa, Sturgess said it was important to be aware of the available infrastructure, which is not always on a par with Europe or the US.