An exclusive club of banks that has long dominated commodities trading is opening up as some big players shrink, allowing rivals to expand their trading teams in anticipation of better profits when the global economy picks ups.
Reuters reports that higher costs due to tighter regulations and rapidly inflating pay for dealers have combined in recent years with an overcrowded market and low price volatility to undermine profitability in trading oil and metals.
But some cost pressures are now easing as salaries drop to more realistic levels, while the banks are no longer trying to emulate major energy groups or specialist trading houses and are instead strengthening their services to commodities clients.
Banks such as Citi, which had to retreat during the financial crisis, are now building up their commodities teams. The top five established players - Goldman Sachs, Morgan Stanley, JP Morgan, Barclays and Deutsche Bank - face a challenge to their supremacy.
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