Wall Street firms are beefing up their commodity trading desks in an effort to diversify their revenues. This comes as their derivatives trading activities are facing increasing regulatory oversight.
According to a report by Reuters, firms are hiring specialists who can buy and sell physical commodities such as liquefied natural gas, crude oil, iron ore and coal. And they are offering top salaries that match the levels seen at the end of the most recent commodities boom in 2008, in an effort to poach top traders from other companies.
The big bucks are going to senior, high-producing traders. This includes compensation guarantees of $5 million or more for the top performers in the industry. The norm for solid performers is about $1 million a year, including base pay of $400,000 plus bonuses, according to George Stein, managing director at Commodity Talent LLC in New York, who is quoted in the article.
Some investment banks, such as Goldman Sachs, have simply purchased entire trading teams such as their deal to acquire North American gas trader Nexen. This year, JPMorgan Chase acquired part of oils and metals trader RBS Sempra, as well.
Do you have commodities experience? Have you seen an uptick in hiring or movement among your peers? Let us know in the comments section below.