Commodity Brokers Get Shelter From EU’s Shift to Exchanges

Commodity brokers, facing a loss of business from a shift of derivatives trading onto exchanges, are seeking a reprieve under European proposals letting them maintain control of less transparent niche markets.

Energy derivatives that don’t trade continuously, such as swaps and options in Dated Brent crude and carbon permits, should be treated differently than other asset classes such as equities, Alex McDonald, chief executive of the London Energy Brokers’ Association, said in an interview last month. Rules being considered by European lawmakers will help determine which contracts are traded through Organized Trading Facilities, or OTFs, where brokers wouldn’t need to disclose bids and offers.