do commodities traders in IBs deal with physicial trading like those in glencore, vitol etc.
and what actually is the job scope of commodities traders in IB?
pls enlighten me. thank you
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Physical traders are different in the sense that they deal with the physical trading of the products. They negotiate the deliveries of the underlying product.
A commodities trader trades the futures contracts on the futures exchanges just like a stock trader trades on the stock exchanges.
I can't exactly say what the difference is between IB and trading house are because I wouldn't really think that they would do commodities in IB.
A difference between stocks and commodities is stocks are extremely regulated and commodities are only somewhat regulated. You can trade on insider information in commodities and it's completely ok.
I can help you with questions as far as the futures trading goes as I work at a futures trading firm, so if you want you can message me.
sure i will msg u
bumps for more replies
@"Skinnayyy" pretty much answered your question mate, but here's some more info:
Physical houses like Glencore, Trafi, Noble, Gunvor, etc. trade, literally, physical commodities. This means they may be involved in all stages - downstream, midstream, upstream. They source material/resources, find a buyer, figure out how to ship, hedge the shipping risk, hedge counterparty risk, figure out IncoTerms and payment terms they want to use, etc.The traders there are often travelling and cultivating new business in person in various parts of the world. It's a physical job in every aspect and most business is conducted in person or over the phone as opposed to the screen.
Commodities traders in IBs work purely with paper products as opposed to physicals. They only trade derivatives of the underlying product. They trade on behalf of clients who may want unique solutions to hedge their commodity price risk. They may also be involved in structuring exotic derivatives for various commodities, but again everything is on paper. An IB commodity trader will never see in person the actual product they are trading unlike a physical trader. Very different jobs.
Source: I was very much interested in pursuing a physical trading career but it's arguably even more difficult to break into than traditional IB.
Search on this forum, there are plenty of threads about physical trading.
Also on a side note, IBs used to do physical trading (but never on the same scale as the physical houses) in addition to the paper stuff but since the crisis and due to really low prices as of late, most have shut down or divested these businesses
so it's true that IBs do deal with physical trading. goldman and Barclays are still at it right?
Is this Joseph?
The role doesn't exist anymore at IBs, why are you interested..?
well i'm just curious
JPM sold theirs to Mercurial recently. Banks are done with it due to increasing regulations.
what abt GS? i read that they r still doing it?
I know you said you read the previous posters' comments... But you didn't read them obviously, or you would know the answer to that question. Gotta love the responses in this thread though hahaahah
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