LONDON Dec 10 Deutsche Bank AG has
now closed its iron ore swaps business as part of an overall
strategy to get out of physical commodities and maintain only a
limited presence in commodity derivatives.
According to industry sources, Germany's largest bank laid
off its iron ore swaps team after announcing last week that it
would exit commodities due to toughening regulations and
"Iron ore is not one of the derivatives Deutsche are staying
in," an industry source said.
A Deutsche Bank spokesman declined to comment.
The bank's exit from iron ore derivatives follows Goldman
Sachs and Morgan Stanley's move to exit the
business, and leaves only Credit Suisse and Macquarie as the
main financial players in the space.
Deutsche said last week it will cut 200 jobs in energy,
agriculture, base metals, coal and iron ore, retaining only
precious metals and a limited number of financial derivatives
Together with Credit Suisse, Deutsche was a pioneer of the
iron ore swaps market in 2008, though industry participants
insist its exit will have a negligible impact on volumes.
"Singapore Exchange (SGX) swaps volumes are up on a monthly
basis ever since they started clearing," another source said.
Other sources noted that most banks are already out of iron
ore swaps, but there was still broad based interest from miners,
merchants, steel mills, steel consumers and funds.
Up until China's recent launch of an iron ore futures
contract, SGX cleared over 90 percent of globally traded iron
ore swaps, but volumes were still just a fraction of the 1
billion tonnes of physical iron ore traded globally each year.