Commodity brokerage of the year: OTC Global Holdings

Energy Risk Awards 2022: Global brokerage expands into new markets and registers impressive growth

Javier Loya, OTC Global Holdings

Commodity markets have been hugely volatile over the past 18 months with participants contending with Covid-19, extreme weather events in key markets such as Texas and the Russian invasion of Ukraine.

Being able to access liquidity, receive real-time data analytics, and tap into real-life market expertise has been vital. OTC Global Holdings (OTCGH), the winner of this year’s Energy Risk Brokerage of the year award, offers its clients all three of these key services.

Its clients have benefited from the liquidity pools of its network of nearly 20 brokerages, as well as having access to its hybrid voice/electronic EOXLive platform, and from the expertise of its brokerage team, which includes ex-traders and schedulers from across the commodities markets, says Javier Loya, co-chief executive and chairman of OTCGH.

In addition to execution, EOXLive – which was launched in 2012 – allows clients to receive real-time analytics and live market data from the organisation’s brokers. It combines publicly available data with proprietary trading information and quotes to generate real-time curves. This, alongside brokers’ real-world knowledge and expertise, enables OTCGH to provide clients with logistics and freight market expertise when moving physical commodities around the world.

Joe Kelly, OTC Global Holdings

“No matter the execution method, there is a broker standing behind every trade,” says Joe Kelly, co-CEO and president of OTCGH. “That confidence allows our clients to receive guidance and clear execution, while accurately and completely understanding risk in complicated, fast-moving and seemingly unpredictable market conditions.”

The brokerage, which is headquartered in Houston, Texas, and New York City, registered year-on-year revenue growth of 14% from 2020–21. An additional acceleration in the early part of 2022 resulted in a revenue increase of more than 30% in February 2022, versus the same month the previous year, says Loya.

The firm has also expanded into two new markets over the past 18 months.

“Despite ongoing challenges across the commodities markets, OTCGH saw opportunities to grow and better serve its client pool,” says Kelly. This included an expansion into shipping in 2021, which was a “natural evolution” for the brokerage, according to Kelly. “With our market share across all commodities covering every aspect from the physical product to the hedge and freight, it only made sense for us to add the shipping component to our offerings,” he says.

OTCGH commenced physical shipbroking at the start of 2021 via its subsidiary Oil Brokerage. Starting in London, this offering was expanded to Dubai at the beginning of 2022. In addition to its New York and Houston offices, OTCGH also has a physical presence in Chicago, New Jersey and Louisville in the US, as well as in London, Geneva and Singapore.

The shipping team currently covers clean vessels – predominantly medium-range and long-range tankers – but Kelly says that a positive reception from the market has encouraged the firm to consider other products and vessel sizes during 2022.

In another new development, OTCGH launched an ethanol desk in October 2021 as part of its Ion Energy UK division, to capture activity in this market spurred by European Union mandates for ethanol blending. In time, Kelly says OTCGH hopes to develop a fully connected global ethanol desk, integrating physical and financial market flows. The next step will be to launch a US ethanol desk later in 2022 to align with similar regulations in that market, he explains. The European team has also set up a paper contract for Asia in a bid to support the development of a market in that region.

OTCGH is structured as an umbrella organisation for almost 20 independent brokerages operating across the global commodity complex in markets including oil, electricity, natural gas and refined products. Overall, these companies serve more than 500 institutional clients and transact in hundreds of commodity delivery points across Asia, Europe and the Americas.

“OTCGH brings together powerful brokers with an entrepreneurial spirit and empowers them to flourish in this fast-paced market by driving greater efficiencies through value-added services for clients,” Kelly says.