Trafigura paper reignites debate on systemic risk

Commodity trading houses "not too big to fail", research argues

Craig Pirrong, University of Houston

A recent white paper published by Netherlands-based Trafigura has attracted both approval and sharp criticism from market observers, by attempting to prove that it and other commodity trading houses are not a source of systemic risk.

On April 24, the company released a 64-page paper on its website that strongly rejects the argument that commodity trading houses are ‘too big to fail'. The paper, sponsored by Trafigura and authored by Craig Pirrong, a professor at the University of Houston's Bauer