Former Tullett Broker Starts Commodities Options Business

Richard Wilson, a director of carbon emissions, coal and iron ore at Tullett Prebon Plc (TLPR) until April, has set up his own commodities options brokerage.

Hot Options Ltd., which opened last month, handles carbon, coal and iron ore options as commodities trades are increasingly conducted on exchanges, Wilson, 41, said in an interview today from his home office near Basingstoke, England.

“There is plenty of scope for boutique broking,” said Wilson, who matched buyers with sellers at Tullett for 20 years. “Underlying markets are shifting toward the exchanges.”

Trading in European Union carbon permit forwards is shifting to exchanges from brokers as the eight-year-old market matures. The volume of EU carbon contracts handled by members of the London Energy Brokers’ Association plunged 52 percent in August compared with the same month last year, the group said Sept. 4. The volume of contracts handled by ICE Futures Europe in London, the biggest exchange for carbon trading, dropped 41 percent in the same period.

Most options trades in energy markets still include a broker, Wilson said. Hot Options will handle contracts for clearing on multiple exchanges, including ICE and CME Group Inc., he said.

Options are the right, but not the obligation, to buy or a sell an asset at a set date and price. Traders and investors use the contracts to bet on or guard against price fluctuations in underlying assets.

Wilson declined to detail why he left Tullett. “After 20 years of service, it was time to move on,” he said.

Hot Options is a trading partner of Schneider Trading Associates Ltd. in London, according to its website.

To contact the reporter on this story: Mathew Carr in London at m.carr@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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