There's a shift going on in the commodities sector, away from the large Wall Street banks and toward hedge funds and trading firms such as Glencore, Noble Group, Gunvor and Mercurias, and it's being driven by two major themes: money and freedom.
As far as the money is concerned, the recent cutbacks, caps and deferred bonuses imposed by the bulge banks provided an opening for the trading firms to lure some top commodities professionals dissatisfied with their shrinking paychecks. Another factor driving commodities stars away from the banks are the impending regulations whether in the form of the Volcker Rule, new CFTC regs and Dodd-Frank. The trading firms and hedge fund offer traders, structured products creators and originators the freedom to operate under less or different restrictions.
"Compensation for professionals at physical trading firms have not been subject to the type of scrutiny as those at banks," explains Vickram Tandon, executive director at The Options Group, a New York-based executive recruiting firm. “Most of the hiring activity today has been concentrated among the large energy, metals and agricultural trading firms in EMEA, and we anticipate Asia to grow more active later in the year," Tandon tells eFinancialCareers.
What about the U.S.?
Unfortunately, according to Tandon, the peak hiring in commodities in the U.S. occurred in 2010 and 2011. This is borne out by a report we issued last month, which showed that among the top job sectors in the financial markets, commodities grew the most, with job opportunities up 105 percent between 2010 and 2011. "Today, among American-based firms, the hiring tends to be opportunistic upgrades in key areas," says Tandon.
What skills are in demand?
This has become a tough market, and Tandon says you have to have the right skills for the right position. “With the quality and quantity of talent I’ve seen over the past few months, firms are in a favorable position of not having to settle for a round hole to fill a square peg," he says. "You need to have the right skill set and experience. Over the last year, the focus has shifted toward structuring and origination, so those who can originate deals or have strong structuring expertise were in high demand."
About one dozen merchants that buy and sell a trillion dollars worth of commodities every year are also reportedly finding it easier to lure commodity traders by promising uncapped bonuses and a future share in the firms, most of whom are privately held, according to Reuters.
It used to be seen as a step up among commodities professionals to move from a merchant trading firm to an investment bank. Now, experienced bank traders are happy to go the other way.
"Culturally, there can be some difficulty in making the transition from a bank to a trading firm because these are very different environments," says Tandon.