Trafigura moves hedging out of Europe, leads U.S. oil exports race

LAUSANNE, Switzerland (Reuters) – Trading giant Trafigura has moved its commodities hedging operations to the United States and Asia and away from Europe to avoid being subject to new, tighter MiFID II market regulations. “We moved our hedging business away from Europe into the U.S. and Singapore and other locations,” Chief Financial Officer Christophe Salmon told reporters. Trafigura was one of the main critics of Europe’s MiFID II regulations, saying they would drive business away from the continent by introducing unnecessary complications to operations. MiFID II introduced position limits on contracts such as Brent oil or refined products but many traders have long argued that they hold large positions in paper markets to hedge risks in the physical market rather than for purely speculative purposes. Trafigura trades around 5 million barrels per day (bpd) of oil and refined products, roughly on par with rival Glencore but behind the world’s largest oil trading house, Vitol. “You don’t want to diversify for the sake of it. You have to be in the top 3 in any commodity you trade. It is extremely important to maintain scale,” Chief Executive Jeremy Weir told the same briefing. Weir said Trafigura has been actively aggregating volumes… continue reading

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