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Commodity Trading in the United Kingdom
Finance & Accounting
Pages 52 (13052 words)
The purpose of this dissertation is to illustrate and to examine the trading of commodities in the United Kingdom in an era that highlights the advent of electronic trading platforms, electronic trading and automated trading made possible due to advances in computer and communications technologies. …
This research study examines how two of the largest commodity traders in the world, Vitol and Glencore International, conduct their commodity trading activities through the commodity exchanges in the United Kingdom and in its OTC market. The pit trading system of the years gone by is now replaced by electronic systems that receive orders from traders through the Internet to match these orders with other orders for execution of a transaction. In an electronic exchange the clearinghouse regulated by a supervisory body and the government acts as an intermediary, to deliver lower costs, security, reliability and a global reach for trading in commodity contracts and commodity derivatives. The OTC market in the United Kingdom is less strictly regulated than the exchanges listing commodity contracts and commodity derivatives, but this market offers flexibility for those with needs that standardised commodity listed contracts cannot satisfy. A literature review and semi-structured interviews with commodity traders with expert knowledge assist the research together with the case studies for Vitol and Glencore International. The research concludes that it is likely that the United Kingdom commodity market will continue to attract interest from all around the world with a promise for delivering more for less even into the future. ...
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