Commodity Markets: Regulation Guides Growth Opportunities
Abstract
The commodity derivatives market has been in upheaval since the financial crisis. The OTC commodity derivatives market has been shrinking since June 2008, falling by 78% in terms of notional outstandings. Exchange-traded derivatives declined in 2007, but have grown 123% since then.
The importance of commodities as an alternative asset class has been highlighted by increased investment in exchange-traded derivatives over the last two years. Regulation has played an important role in the market’s direction. In this report, Commodity Markets: Regulation Guides Growth Opportunities, Celent looks at the changes that led to a visible difference in the way business is conducted in commodities markets.
“Tighter regulation of the commodity derivatives markets has led to higher investment in physical commodities, turning the spotlight on the latter market,” says Anshuman Jaswal, Celent Senior Analyst and author of the report. “Not only are the banks moving into this field, but commodities trading companies are moving in the opposite direction and increasingly setting up asset management and derivatives trading units.”