Broker of the year: BOCI

In an extremely difficult 12-month period for the global commodities markets, characterised by extreme volatility around recurring outbreaks of Covid-19, Russia’s conflict with Ukraine and fears over rising inflation and interest rates, BOC International’s (BOCI’s) reliability, innovation and client focus won it the 2022 Energy Risk Asia award for Broker of the year. Over this turbulent period, BOCI continued growing and consolidating its dominant position in base metals and energy products, particularly in the Asian market, by doing what it has done so many times before when faced with a crisis: continuing to display a strong, reliable business model to its clients and peers, and a core commitment to the highest industry standards.

Raymond Lau, BOCI

Part of this success comes from its advantageous position combining an unsurpassed position in the Chinese market with a truly global reach. The wholly owned investment bank of the Bank of China, with offices in Hong Kong, London, Singapore and Shanghai, BOCI has been dedicated to serving clients globally with extensive product coverage from energy, base metals, precious metals and agricultural products since 2012 when it became the first Chinese clearing member of the Chicago Mercantile Exchange, ICE and London Metal Exchange (LME). Since then, BOCI has grown into one of the largest commodities brokers and clearers for Asian clients, providing global commodity services to clients in China, Asia, Southeast Asia and Europe. With both China onshore and offshore platforms, BOCI provides a full-scale financial solution for its clients in hedging, risk management, market strategy, financing and physical solutions.

This said, BOCI’s commodities activities are not just limited to exchange-traded products at global exchanges. In the energy market, BOCI is providing a wide range of services from brokerage, liquidity and physical delivery service to structured repo transactions. To cater for the increasing demand for oil and natural gas risk management solutions, BOCI has developed customised products such as over-the-counter (OTC) derivatives products with an underlying of Shanghai International Energy Exchange yuan-denominated crude oil futures. As clean energy has become a key national development strategy of China, BOCI designed the OTC Japan and South Korean marker product, which is based on the major benchmark for liquified natural gas trading in Southeast Asia, to offer more flexible hedging tools for their natural resources and energy clients.

In the metals market, in addition to the growth in its futures and derivatives trading, BOCI offers physical warrants trading to some of its clients. This facility, and the company’s comprehensive understanding of client needs in this space, led to a significant increase in total physical warrants volume, underlining BOCI’s leadership position in the market and as a pioneer in product design and sophistication.

Its extension of the physical warrant to financing combined products is a case in point, allowing clients to fund and reduce margin requirements by using physical stocks as collateral and then allowing them to source more materials from different locations.

Such portfolio structures enable clients to focus on their own physical trading strategies instead of having to concern themselves with the complexity of exchange and derivatives requirements. In parallel with these initiatives, the previous 12 months saw BOCI significantly develop its metals repo trading capabilities with stocks in the Shanghai Free-Trade Zone, with multiple metals repo transactions over the year totalling USD208 million. Further product innovation, such as repo/warrant/physical collateral, further allows BOCI’s clients to fully capitalise on the arbitrage opportunity in the onshore and offshore markets.

For its clients, and as part of its broader brokerage activities, BOCI provides daily market news and trading views. These stand out from other such offerings by dint of BOCI’s extensive bottom-up studies in demand-and-supply dynamics, and its unique understanding of the macroeconomic environment in Asian markets, which helps clients navigate the extreme volatility. In this context, because of BOCI’s timely and expert market information, many clients were able to profit from the market uncertainty, while others managed to minimise their losses.

Over the past 12 months, BOCI has been able to enhance this reputation as a trusted broker with improvements in its clearing system, and by further commitments to providing a full range of risk management and trading platform services for its clients in China and the rest of the world. Its client service capabilities have been subject to a continuous programme of enhancements to cover futures, OTC products, and physical and structured financing. All of these improvements have been highly praised within the industry.

These efforts have continued to gather pace at BOCI, despite the difficult conditions of the previous 12 months, in line with the bank’s commitment not just to the optimal functioning of the global commodities markets but also to China’s dual circulation development plans. The aim for BOCI in this context is to optimally position the Bank of China Group Global Commodities Centre with the goal of achieving a “one-point access, globally responsive, comprehensive service”.

With its already comprehensive product range and its strong professional team, BOCI’s existing clients – from smelters and producers to downstream users – continue to benefit from this approach, as evidenced by this latest Energy Risk Asia award. However, BOCI intends to build on this further in the coming year, providing its clients with seamless and high-level broking and banking services across all key access points worldwide, from the LME to the Shanghai International Energy Exchange.

Raymond Lau, chief operating officer of the commodities business, overseeing the global franchise headquartered in Hong Kong, says: “Strategically positioned to bridge our Asian clients to global markets, BOCI will also continue to offer its clients all of the products they need – from exchange-traded futures, the Shanghai International Energy Exchange and LME warrants to physicals in China – and to allow them to benefit from the tailor-made financial solutions, foreign exchange cover and cross-border payment arrangements in physical transactions that BOCI can offer.”

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