ThE FUTUrE oF CommodITy dErIvaTIvES - Futures and Options ...

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the future of
commodity derivatives
volatility is; it’s probably as individual as what each
one of us thinks it is.
But we have worked out there are gaps in
knowledge and understanding; there are things we
need to communicate. As a commodities industry, is
there a way we can bring that education together?
This isn’t about one exchange or one region; it’s
about everybody. Should we do what the OCC do in
the USA, which is pretty effective? You have one body
that does a large proportion of the options education.
Can we do that?
BH I wouldn’t have thought so. There are a
number of people you’ve got to educate, including
policymakers, and we’re talking about Europe, which
is so disparate anyway. I don’t think you can put
that on one body. The problem is that if there is a
gap in knowledge, it gets filled by these immediate
assumptions, which as we’ve heard are often
completely unfounded.
CF So, do politicians fill the gap?
BH Unfortunately they do. The industry must
lobby hard on all of these issues. It will take a lot of
work and a long time, though.
CF To wrap up, would you offer a few views
on what you think the developments will be. It can
be anything you think is relevant. Personally I think
water, as a product, is very interesting and there will
be some big opportunities in that.
JW I think volatility in a product that allows
you to express that in a clean, concise way. It will
take time but what we’ve been talking about all
night is how volatile these instruments are. And a
unique way to be able to express that is needed in the
marketplace.
JP There’ll be a shift from west to east towards
where the exchanges are located. Regulation will
become too extreme and it’ll deter people from
investing here. Already exchanges exist that we just
can’t get at, in Asia. And the shift towards economic
power will continue with the exchanges moving east.
MC You’ll see gravitation towards the new
producer countries like Brazil and India. From
our own perspective, we are seeing increased
opportunities in deepwater, biofuels and gas.
The drivers are emerging markets and developing
economies, where there is increasing demand
for energy.
CD From our point of view, one of the biggest
challenges is obviously regulation, which drives
innovation. But we need clarity; we can’t develop any
software if we don’t have clarity. A very small change
in the specification can lead to an enormous change
in the way we need to create, deploy and architect the
technology. We just need a clear picture of exactly
where the industry is going.
BH I foresee a huge amount of pain for some
people on the regulatory side. But I also see issues
with jurisdictions engaging in a kind of ‘resource
nationalism’ over certain commodities, especially
the rare earth commodities. I think there’ll be some
difficulties in that area.
LH One thing you’ll see is globalisation of
these markets. People will come into them from the
financial side and start trading utility energy. What
I really want to get across is that the regulation in
these markets needs to be tailor made to that market;
we don’t want to be here in two years’ time where a
small German municipality can’t trade on an energy
exchange because it doesn’t have the sophistication.
We really need to have appropriate levels of
regulation.
IDX Gala Dinner
In aid of Futures for Kids
Wednesday 27 June 2012
The Artillery Gardens
@ the HAC, London EC1
FIA and FOA are pleased to announce that
the IDX Gala Dinner will, once again, be held
in aid of Futures for Kids.
For information on all FOA events, including
sales and sponsorship, please contact:
Bernadette Connolly
connollyb@foa.com
+44 20 7090 1334
FIA/FOA International Derivatives Expo
26-27 June 2012
The Brewery, Chiswell Street
London EC1
Mark Your Diary!
The Futures Industry Association and the
Futures and Options Association are pleased to
present the fifth International Derivatives Expo.
Last year’s event boasted more than 40 exhibits
showcasing the latest in products and technology for
the derivatives industry, plus 30+ sessions with high-
profile speakers, information-packed workshops, and
endless networking opportunities.
Reserve Your Exhibit Stand or Sponsorship Now
Contact
Toni Vitale Chan, tvitale-chan@futuresindustry.org, 1.312.636.2919
or
Bernadette Connolly, connollyb@foa.co.uk, +44 [0]20.7090.1334
for information on becoming a sponsor or exhibitor.
www.idw.org.uk