The changing face of global commodities markets: understanding the role of trading houses

Published in 
CEPS - Centre for European Policy Studies 1 Place du Congrès / Congresplein 1000 Brussels

In recent years, commodities markets have undergone significant changes, rising from relative obscurity to a subject of intense scrutiny by policy-makers and supervisors. In a more global market structure, trading houses play a pivotal role in the supply chain that brings commodities from producers to billions of consumers around the world. As a key part of the infrastructure that performs transformation services, commodities trading houses allow worldwide physical trade of commodities by managing complex risks. Their recent growth in size and reach - now comparable to oil majors and big mining companies - has raised questions about the soundness of risk management procedures involved in complex operations across diverse commodities physical and paper markets. Despite their growing importance in the commodity value chain, however, the business model of trading houses has been relatively unexplored by the academic literature and policy-makers, as their linkages with financial markets.

This half-day conference organised by the European Capital Markets Institute and the Centre for European Policy Studies aims at contributing to a more informed policy debate about the functioning of global commodities markets and the role of trading houses. Following up onto last year publication of a major ECMI/CEPS contribution to the academic and policy debates (available here), aimed at raising awareness about the functioning of price formation in commodities markets and about the interaction between physical and futures/financial markets, the event will host the presentation of an extensive report drafted by Professor Craig Pirrong (University of Houston) and titled “The Economics of Commodity Trading Firms”. The report, commissioned by Trafigura, explains how trading houses manage commodities risks. A panel discussion on the evolution of commodities market structure and its impact on commodities risk management and trade will follow.

Conference Program

9:30-10:00 Registration

10:00-11:15 "The Economics of Commodity Trading Firms", presentation of a report by Craig Pirrong, Professor of Finance, Bauer College of Business, University of Huston


  • Diego Valiante, Head of Capital Markets Reseach, CEPS and ECMI
  • Hélyette Geman, Director, Commodity Finance Centre Birkbeck, University of London
  • John Llewellyn, [moderator], Partner, co-founder Llewellyn Consulting

11:15-11:30 Coffee Break

11:30-13:00 Panel discussion The impact of developments in global commodities market structure on risk management and trade: prospects and challenges


  • Edward Lucas,  senior editor, The Economist
  • Christophe Salmon, Chief Financial Officer Europe, Middle East and Africa, Trafigura
  • Valérie Ledure, Policy Officer, DG Internal Market and Services, European Commission
  • Peter Caddy, Global  Business Development Director, Argus Media Ltd
  • John Llewellyn [chair], Partner, co-founder Llewellyn Consulting

      13.00-14.00 Lunch & end of the conference



  • Participation in ECMI-CEPS meetings is a benefit of ECMI and CEPS membership. ECMI and CEPS members register free of charge. EU and national officials, academics (including PhD students), NGOs (not representing a commercial interest) as well as press are also admitted free of charge.
  • Other participants may be admitted for €175 (21% VAT included, payable at the registration desk). If you have questions regarding membership or participation, please contact diana.musteata@ceps.eu before registering.