JPMorgan Commodities Exit May Sap Liquidity Until Others Step in


JPMorgan Commodities Exit May Sap Liquidity Until Others Step in

http://www.bloomberg.com/news/2013-07-27/jpmorgan-commodities-exit-may-sap-liquidity-until-others-step-in.html

A decision by JPMorgan Chase & Co. (JPM) to exit its physical commodities business would temporarily reduce market liquidity before other companies quickly take its place, according to analysts and traders.
New York-based JPMorgan, the largest U.S. bank, said yesterday that it’s “pursuing strategic alternatives,” including the sale or spinoff of its commodities business, after an internal review. The statement came three days after a congressional hearing investigated whether deposit-taking banks should be allowed to trade raw materials such as oil and industrial metals.
1:48:06
July 23 (Bloomberg) — Joshua Rosner, managing director at Graham Fisher & Co., Tim Weiner, global risk manager of commodities and metals at MillerCoors LLC, Saule Omarova, a law professor at the University of North Carolina at Chapel Hill, and Randall Guynn, head of Davis Polk & Wardwell LLP’s financial institutions group, testify at a Senate subcommittee hearing on U.S. banks, financial rules and commodity trading. The panel is led by U.S. Senator Sherrod Brown, an Ohio Democrat, who is among lawmakers and regulators who say banks can drive up prices when they control both the physical products and the financing. (Source: Bloomberg)
1:10
July 23 (Bloomberg) — Senator Sherrod Brown of Ohio, Graham Fisher & Co.’s Joshua Rosner, Davis Polk & Wardwell LLP’s Randall Guynn and Senator Elizabeth Warren of Massachusetts comment during a Senate Banking subcommittee hearing on the ability of some U.S. banks to own and trade raw materials. (Excerpts. Source: Bloomberg)
JPMorgan owns and trades financial and physical commodities including crude oil, natural gas and power, and describes itself as “one of the world’s leading energy market makers.” The bank may be the first to exit physical commodities, though others may follow if regulations are changed, as suggested by Senator Sherrod Brown, an Ohio Democrat whose subcommittee of the Senate Banking Committee held the July 23 hearing.
“It looks like they want to get ahead of what appears to be a new wave of regulation that will limit the activities of the banks in the commodities sphere,” said John Kilduff, a partner at Again Capital LLC, a New York hedge fund that focuses on energy.
Regulators need to take a “long, hard look at the practice of banks holding physical commodities,” Brown said in a statement before the hearing. JPMorgan’s decision to consider selling or spinning off its commodities business is “good news for consumers and taxpayers,” he said in an e-mail yesterday.
Liquidity Drop
While the exit of JPMorgan and other banks may reduce liquidity in the short term, they will be replaced by commodities-trading firms such as Switzerland-based Glencore Xstrata Plc. (GLEN), Kilduff said.
“Maybe JPMorgan is just getting ahead of the game a little bit,” said Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors. “Commodities have been part of their business, but not a big driver of their revenue. If Goldman or Morgan Stanley (MS) decides to get out of commodities, people will definitely take more notice of that.”
The effect on the market of JPMorgan’s exit may depend on whether the commodities business finds a new life, either on its own or in the arms of a buyer.
“If JPMorgan were to sell or spin off the physical commodities business and it became a new entity, the impact on the market would be minimal,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston. “If JPMorgan were to just shut it or sell to someone with the same business, that may sap liquidity from the market.”
Metal Warehouses
The congressional inquiry came three weeks after the London Metal Exchange said it wants to help unclog growing queues at repositories, which companies ranging from beer makers to wire fabricators say have reduced the availability of aluminum and copper.
At the same time, prospects for gains in commodity prices may be dimming. Analysts at banks from Citigroup Inc. to Goldman Sachs Inc. have said the decade-long commodity bull market is ending after higher prices spurred expansions at mines, farms and oil fields.
Increased regulatory scrutiny of banks and commodities, along with the outlook for lackluster gains in many raw materials, provides a “one-two punch,” to bank commodity businesses, John Stephenson, who helps oversee about C$2.7 billion ($2.6 billion) at First Asset Investment Management Inc. in Toronto, said in a telephone interview.
“The banks are saying ‘I don’t need the hassle, and there’s no money to be made anyhow,” Stephenson said. “If it was the only game in town, and you were printing money, and there were just a few pesky regulators hanging around, that would be another thing. But with the light being shone now, the implications are very negative.”
To contact the reporters on this story: Edward Welsch in Calgary at ewelsch1@bloomberg.net; Joe Richter in New York at jrichter1@bloomberg.net.
To contact the editors responsible for this story: Dan Stets at dstets@bloomberg.net; Steve Stroth at sstroth@bloomberg.net.

NASDAQ OMX and NGX Announce U.S. Physical Energy Alliance


NASDAQ OMX and NGX Announce U.S. Physical Energy Alliance
Press Release: The NASDAQ OMX Group, Inc. – Tue, Jul 9, 2013 10:05 AM EDT

http://finance.yahoo.com/news/nasdaq-omx-ngx-announce-u-140503566.html

NEW YORK and CALGARY, July 9, 2013 (GLOBE NEWSWIRE) — NASDAQ OMX Commodities and Natural Gas Exchange Inc. (NGX), a wholly-owned subsidiary of TMX Group, today announced that they have entered into a strategic alliance (the Alliance). The Alliance involves the NASDAQ OMX US physical energy entity, NASDAQ OMX Commodities Clearing Company (NOCC), a wholly-owned subsidiary of The NASDAQ OMX Group, Inc., and the physical energy exchange and clearinghouse of NGX, which serves more than 250 contracting parties in the US and Canada.
Together NGX and NOCC will provide a premier solution for transacting in physical energy in the US, helping customers maximize collateral efficiency, and enabling increased transparency and market liquidity. The Alliance will leverage NGX’s established US natural gas trading and clearing expertise combined with NOCC’s physical power know-how. NGX will offer trading and clearing services for the Alliance and NOCC will contribute account management, product development, and scheduling resources.
“Adding physical power products with an established organization such as NOCC is a natural addition to our successful physical natural gas business in the US,” said Jim Oosterbaan, President of NGX. “We expect this Alliance to help new and existing NGX customers to improve their liquidity and collateral efficiencies through cross commodity netting.”
“NGX is strategically aligned with our physical power business and their complementary natural gas products present a great opportunity to leverage our combined experience and capability in this unique regulatory environment,” said Magnus Haglind, Head of US Commodities for NASDAQ OMX.
Subject to regulatory approval, NGX, a recognized exchange and clearing agency in Canada and a registered U.S. Foreign Board of Trade and Derivative Clearing Organization, will list and clear physical power futures contracts based on NGX’s existing US physical natural gas futures contracts. As a result, contracting parties will benefit from:
Collateral efficiencies under existing NGX margining rules via spread credits and cross-commodity netting
Regulatory certainty
Improved liquidity and distribution in Canada and the U.S.
Introduction of physically cleared power products to WebICE through NGX’s alliance with the InterContinental Exchange, Inc.
NGX expects to list the physical power futures contracts in September in concert with the novation of NOCC’s remaining physical power contracts to NGX. The NGX physical power futures will initially be listed exclusively for the ERCOT (Texas) market, expanding later into the WECC region.
About TMX Group (TSX:X)
TMX Group’s key subsidiaries operate cash and derivative markets and clearinghouses for multiple asset classes including equities, fixed income and energy. Toronto Stock Exchange, TSX Venture Exchange, TMX Select, Alpha Group, The Canadian Depository for Securities, Montreal Exchange, Canadian Derivatives Clearing Corporation, Natural Gas Exchange, BOX Options Exchange, Shorcan, Shorcan Energy Brokers, Equicom and other TMX Group companies provide listing markets, trading markets, clearing facilities, depository services, data products and other services to the global financial community. TMX Group is headquartered in Toronto and operates offices across Canada (Montreal, Calgary and Vancouver), in key U.S. markets (New York, Houston, Boston and Chicago) as well as in London, Beijing and Sydney. For more information about TMX Group, visit our website at http://www.tmx.com. Follow TMX Group on Twitter at http://twitter.com/tmxgroup.
About NASDAQ OMX Group
The inventor of the electronic exchange, The NASDAQ OMX Group, Inc., fuels economies and provides transformative technologies for the entire lifecycle of a trade – from risk management to trade to surveillance to clearing. In the U.S. and Europe, we own and operate 23 markets, 3 clearinghouses and 5 central securities depositories supporting equities, options, fixed income, derivatives, commodities, futures and structured products. Able to process more than 1 million messages per second at sub-40 microsecond speeds with 99.99+% uptime, our technology drives more than 70 marketplaces in 50 developed and emerging countries into the future, powering 1 in 10 of the world’s securities transactions. Our award-winning data products and worldwide indexes are the benchmarks in the financial industry. Home to approximately 3,300 listed companies worth more than $6 trillion in market cap whose innovations shape our world, we give the ideas of tomorrow access to capital today. Welcome to where the world takes a big leap forward, daily. Welcome to the NASDAQ OMX Century. To learn more, visit http://www.nasdaqomx.com. Follow us on Facebook (www.facebook.com/NASDAQ) and Twitter (www.twitter.com/nasdaqomx). (Symbol: NDAQ and member of S&P 500)
About NASDAQ OMX Commodities Clearing Company
NASDAQ OMX Commodities Clearing Company provides trading opportunities to its physical power and natural gas trading counterparties, supported by sophisticated credit and risk management operations. It is part of NASDAQ OMX Commodities, which is a trademark of the NASDAQ OMX Group, Inc.
About NASDAQ OMX Commodities
NASDAQ OMX Commodities is the brand name for the NASDAQ OMX Group’s worldwide suite of commodity related products and services. The NASDAQ OMX Commodities offerings include power, natural gas and carbon emission markets and clearing services. NASDAQ OMX Commodities is a trademark of the NASDAQ OMX Group, Inc.

NASDAQ OMX Commodities Europe is the trade name of NASDAQ OMX Oslo ASA which is authorized as a commodity derivatives exchange by the Norwegian Ministry of Finance and supervised by the Norwegian Financial Supervisory Authority. All trades with NASDAQ OMX Commodities Europe are subject to clearing with NASDAQ OMX Clearing.
NOS Clearing ASA is the leading clearing house for the freight market and a specialist clearing provider to the commodities markets. The company is wholly owned by the NASDAQ OMX Group Inc. The clearinghouse, which is situated in Oslo, has more than 300 members.
NASDAQ OMX Clearing is the trade name of NASDAQ OMX Stockholm AB which is authorized and supervised as a multi-asset clearinghouse by the Swedish Financial Supervisory Authority in Sweden as well as authorized to conduct clearing operation in Norway by the Norwegian Ministry of Finance.
Cautionary Note Regarding Forward-Looking Statements
Information set forth in this communication contains forward-looking statements that involve a number of risks and uncertainties. NASDAQ OMX cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information. Such forward-looking statements include, but are not limited to, statements about our capital return initiatives. Forward-looking statements involve a number of risks, uncertainties or other factors beyond NASDAQ OMX’s control. These factors include, but are not limited to, NASDAQ OMX’s ability to implement its strategic initiatives, economic, political and market conditions and fluctuations, government and industry regulation, interest rate risk, U.S. and global competition, and other factors detailed in NASDAQ OMX’s filings with the U.S. Securities and Exchange Commission, including its annual reports on Form 10-K and quarterly reports on Form 10-Q which are available on NASDAQ OMX’s website at http://www.nasdaqomx.com and the SEC’s website at http://www.sec.gov. NASDAQ OMX undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise.

Kelag Group Selects SunGard’s Aligne to Manage its Power & Gas Portfolio, Risk Management and…


Kelag Group, one of the leading energy service providers in Austria, has selected SunGard’s Aligne to manage its power and gas trading, physical operations and risk management in the Austrian, German and South Eastern European markets.

via Pocket http://www.bobsguide.com//guide/news/2013/Feb/7/kelag-group-selects-sungards-aligne-to-manage-its-power-gas-portfolio-risk-management-and-physical-operations.html February 11, 2013 at 04:18PM

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