Saturday 16 December 2017

BoA-ML shuts power and gas trading operation

Several firms have closed their commodity trading arms
Several firms have closed their commodity trading arms

Karolin Schaps and David Sheppard

Bank of America-Merrill Lynch shut its European power and gas sales and trading operation yesterday, the fourth major player to close parts of its commodities business as tighter regulation and fewer arbitrage opportunities erode profits.

Last month, Morgan Stanley sold its main physical oil-trading unit to Russian state-run oil major Rosneft, and Deutsche Bank said it was largely exiting commodities trading. In July, JPMorgan put its physical trading operations up for sale.

The sector is now dominated by commodities trading houses and utilities, with Barclays, Citi and Goldman Sachs among the only remaining large banks with a significant presence.

BoA-ML had been scaling back its trading presence in the European power and gas market over the past few months, a trading source, who has done business with the firm, said.

"The decision follows a recent review of its broader commodities activities and reflects the combined impact of lower client demand for European power and gas hedging and recent regulatory changes," a BoA-ML spokesperson said.

The bank's European carbon trading desk will also be reduced. (Reuters)

Irish Independent

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