5th metals trading risks 2015 summit


Irn recently hosted the 5th edition of the metals trading risks summit on 10th-11th june at the hôtel royal in Geneva.

cExpert speakers from trading companies and metals producers and consumers gathered in Geneva. The focus of discussions were current and emerging challenges that metals trading companies have been facing in recent years, relating to market, counterparty, regulatory, supply chain and financial risks.

The Chairman of the Summit, Simon Grenfell, opened the two day conference by highlighting how the commodity industry is living through some very challenging and exciting times due to recent changes around market risk, regulatory framework and challenges related to producing liquidity.

LME’s Business Development Manager, Alex Shaw, talked the audience through the group’s latest developments. The group was bought by the Hong Kong Stock Exchange and Clearing (HKEx) in 2012, and launched its own clearing house in September 2014. Shaw reminded the audience that it is very important to notice that the volumes for the Shanghai-Hong Kong Stock Connect are rapidly increasing, with quotas being expanded to meet demand. It is not excluded therefore, that the Shanghai-Hong Kong Stock Connect model may be extended to metals in order to enable access to the liquidity of the Chinese investor market.

Shaw continued by informing delegates about LME’s expansion plans into new product areas, such as premium, ferrous band precious contracts. He concluded his presentation by revealing future steps of the LME’s road map to enhance liquidity; this process will include the development of market making programmes and implied pricing in the next few months. Warehouse reforms are also well underway since 2013, with the assessment of powers to limit rents in queues as a future policy option, and an evaluation of structural solutions to high charges. Lukasz Bielak, Market Risk Specialist at KGHM, one of the largest producers of copper and silver in the world, followed with a presentation focused on their portfolio optimisation strategy. He gave an overview of the key elements of KGHM’s price risk management, supporting the view that there is such thing as a right time for hedging, when the company is not under stress or heavy restructuring. He also emphasised that foreign exchange risk is definitely raising alarm bells, hence there is an increasing need to keep an eye out for it. Other sessions during the first and second day of the Summit addressed technology support, which was seen as an important tool to enhance risk management, as well as credit risk management, new contexts for hedging, market overview, and regulatory risk. The senior level speaker faculty at the Summit included eminent personalities such as Ludwig Clément, Project Manager, CTRM Force; Felipe Margueron, Credit Risk Manager, Vale International SA; Gianlorenzo Capitelli, Credit Director, Gerald Metals; Matt Wade, Head of Risk, LME Clear; Federico Cepeda, Global Commodities Director, Anheuser-Busch InBev SA/NV; Harry Knott, Head of Risk & Derivatives, Brady; Simon Grenfell, Commodities Expert; Christian Wehbe, Founder, Kumpl (Founder and Former CEO of pmtrading); Jonathan Spearing, Senior Associate, Stephenson Harwood LLP; Hugues Watin-Augouard, Global Middle Officer – Copper Concentrates, Louis Dreyfus Commodities; Daniel Brebner, Senior Analyst Metals & Mining, Gunvor SA; Ivan Nappo, Metals & Enegry Regulations Manager, Cargill; Justin Roux, Head of Communications, Luvata; Geert Van den Broeck, Director of Risk Management, Aludium; Sara Vernersson, Metal Risk Manager, Boliden Commercial AB.
This meeting was sponsored by the commodity software solutions provider Brady and supported by the London Metal Exchange, the Geneva Chamber of Commerce, Industry & Services and the Minor Metals Trade Association.