| NEW YORK
NEW YORK Nov 30 Freepoint Commodities has laid
off staff in its natural gas group, the first pull-back for the
upstart trading house founded last year by the former top
executives at Sempra.
The Stamford, Connecticut-based firm, which began trading
last June with the backing of private equity funds and quickly
grew to more than 130 employees worldwide, will remain active in
natural gas and other commodity markets, a spokesman said.
Structurally low natural gas prices have forced it to let go
of some employees in line with reduced staffing needs, the
spokesman said in an emailed statement.
The online publication SparkSpread.com, which initially
reported the news, reported that five natural gas traders and
one crude oil trader are thought to be leaving. The spokesman
would not confirm the number of departures.
Freepoint was started by David Messer, who serves as its
chief executive, along with other executives that built Sempra
Energy Trading, the utility-owned enterprise that moved into a
joint venture with Royal Bank of Scotland in 2008.
The RBS Sempra venture was sold off mostly to JPMorgan Chase
& Co two years later after RBS was forced to divest its
interest in the firm when it took U.K. government bailout money.
Freepoint embarked on an aggressive hiring spree, scooping
up dozens of traders, some of them former Sempra alumni. Many
were fleeing jobs at investment banks that are slashing bonus
payments and imposing new curbs on proprietary trade.
The hiring continued as recently as last month, when
Freepoint hired Volker Goerman, former director of power and gas
from Barclays Plc, as a senior vice president of
business development, according to Principal Search Ltd.
The U.S. natural gas market has not been kind to many
trading companies lately, with persistently low gas prices
bouncing back and forth in a narrow range.
Volatility that once afforded large peaks and valleys and
the opportunity to reap big profits has yielded to hydraulic
fracturing technology that extracts mounting supplies of the
fuel embedded in layers of shale rock miles below ground.
"Following a periodic review of our business and an
assessment of the substantial and, we believe, structural shift
in the North American natural gas market, staffing levels
related to this segment have been aligned with the current
market environment," a Freepoint spokesman said in an emailed
New York Mercantile Exchange natural gas futures prices
sunk to a 10-year low under $2 per million British
thermal units (mmBtu) in April. They have doubled since then,
but few traders have been able to correctly call the turns.
Freepoint's traders are not the first casualties of mass
supply and low prices. Legendary Houston-based natural gas
trader John Arnold, who made billions of dollars trading the
fuel, officially retired and shuttered his Centaurus fund in May
after slowly and quietly winding it down.