Commodities Structuring
What exactly is the role of a commodities structurer? Presumably commodities are a pretty liquid product and most of the trading is cash. Do structurers hedge risk for clients' energy/power/metals exposure? Or what is the point of the structuring guys on a commodities desk? Presumably there is quite a bit of quantitative analysis and some pretty interesting stuff to do on these desks. I don't care about the money, or the hours, I just want to find something that is interesting to do.
The role of a Commodities Structurer is to provide Liquidity and Risk management for the raw materials underlying commodity contracts.
Without a person to monitor and organize the flow of commodity contracts to and from producer to purchaser, there would be tremendous fluctuations in product availability and price; thus causing market volatility and disrupting commerce as we know it.
*In essence, someone working in (SFC) ensures that prices (based upon average production and consumption levels) remain within a certain range so that you never question why food is 1,000,000 x's more accessible to you than 80% of the world's population.
GateBreaker
Gatebreaker is speaking to something different....
commodity structurers will come up with new products, based on the underlying vanilla instruments, that serves the client's needs. so maybe something where the client gets paid provided the price of zinc remains in a range, or something like that.
Contrary to the original post, commodities is NOT a pretty liquid product and most trading is NOT cash. At the large banks, probably 95% of all commodities trading is derivatives, and around half is structured in some way. There are 2 types of commodities structuring. The first type covers what Jimbo mentioned--creating new structured products for investors (CCOs, commodity-linked notes, dispersion options, basket options, etc.). The second type covers corporate structuring. The latter can get much more complex, as they create bespoke hedging solutions to fit a corporates specific needs. Most structuring in power falls under that area. These are also structured with regards to taxes, accounting issues, regulatory issues, etc. The corporate guys can do some really interesting things and tend to coordinate with IBD and PE a lot. At the top banks sales and structuring work hand in hand on a daily basis, as so much of the commodities world requires that.
Thanks skins.
As I understand it, some of the most advanced derivatives come out of commodities, specifically energy. Like, see http://www.lacimagroup.com/
corporate structuring in commodities sounds really interesting...are quant skills the main thing needed for juniors? Could entry level people be successful/helpful and learn everything with just say a BA in Math and basic finance knowledge (intro corp fin book and hull's book)? Or do they only have people with MBAs?
Commodities Structuring - Need Advice (Originally Posted: 02/24/2015)
I have an upcoming interview in Commodities Structuring at GS / MS / DB. Does anyone have advice on what the work is like? Any insight on potential exit ops is especially appreciated. I searched past threads on this site as well as LinkedIn, but didn't find much info.
Thanks in advance!
Is it physical or financial? I think the answer to your question may depend on it.
Also asset or liabilities side?
The group does commodity-linked financing and price risk management for corporates and commodities traders. Solutions include inventory financing, commodity leasing, monetization of future production etc.
So that is the work...exit ops to origination, commodity funds, structured credit funds, etc.
Final round Commodities Structuring (Originally Posted: 01/10/2012)
Been told to read Oil 101, any other advice? Such as what sort of product specific information I should know and also what kind of technical questions can they ask about structuring?
Thanks
nothing in that book will help on final rounds in Srut.... know your greeks and be comfy with numbers
Thanks for the advice!
With regards to the Greeks, how much detail should I go into. I've started reading Hull's book in preparation, will that be enough?
if you are looking for information on O&G, go to ogj.com
Cvat, is this for a post-undergrad or post-mba job?
Sorry, should probably have given some more information. Its for a summer internship and I'm studying mathematics at university.
I've been given further information that its in commodities corporate structuring. Any advice? Thanks!
Commodities trading and structuring in Canada (Originally Posted: 11/06/2009)
I know most big commodities desks are in London and Houston, but I'm trying to get some info on the major commodities groups in Canada (especially Toronto, but also Calgary, Vancouver, Montreal and even Winnipeg if applicable).
Who has major trading operations where? Same question for commodity structuring desks.
How do the Canadian banks stack up in this area, and what US/Euro banks have trading desks or structuring teams in Canada?
Thanks folks.
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