Asia oil brokers brace for crisis-induced shakeup

Asia’s oil broking industry is on the brink of its biggest shake-up in a decade as a plunge in trading volumes forces many to scramble for new markets, rethink alliances or consider shutting up shop.

The global financial crisis has shaken confidence in once blue-chip counterparties to its core, forcing many traders and companies to dramatically scale back activity, affecting brokers like MF Global Singapore and ICAP Energy.
For traders, that means fewer chances for profit, an enforced holiday from the market.

But for brokers whose livelihood depends on the Singapore over-the-counter (OTC) swaps market — the main type of trade for a region that lacks a liquid futures — it means crunch time in an industry that’s already fiercely competitive.

‘There are too many brokers. They will need to merge and some will disappear,’ said a senior derivatives trader with an international bank, speaking on condition of anonymity.

Forbes