Commodity brokerage of the year: Marex

Energy Risk Awards 2021: Acquisitions, organic growth and new technology platform take broker’s services to new level

Jeremy Elliott, Marex

Even if 2020 had been a normal year, Marex would have had a full plate, admits Jeremy Elliott, global head of energy at Marex. In addition to integrating a physical fuel oil business, Marquee Oil Broking, purchased on the last day of 2019, Marex also bought Rotterdam oil brokerage Starsupply in March 2021.

Although the Covid-19 restrictions that forced most employees to work from home made it more challenging, Elliott says Marex was able to fully integrate both businesses. In fact, Marquee has almost doubled its revenues over the past 12 months as part of the Marex group.

The brokerage continued to hire throughout 2020, adding new desks to cover gasoline and middle distillates in Singapore, European over-the-counter crude, physical liquefied natural gas (LNG) and LNG shipping. In November, Marex’s London power desk also added Japanese power-trading capabilities and arranged its first trade in the new market via the European Energy Exchange.

In addition to managing the impact of the pandemic and its related restrictions on its own teams and offices – both new and existing – Marex also had to consider its effect on its clients. “It wasn’t just a hardware consideration,” explains Elliott. “We also had to roll out far more secure authentication so that our teams could operate with the same level of security as usual. As a client-focused business, that was really important for Marex.”

Elliott adds that the brokerage has developed a dual focus: in addition to its power, gas and oil market activities, Marex is looking to develop new markets for clients managing risk as the energy sector transitions to a low-carbon world. In February 2021, the Marex Environmental Group brokered the first-ever New York Tier 1 renewable energy certificate (Rec) future on an exchange-cleared market, the US-based Nodal Exchange. The next month, also on Nodal Exchange, the team brokered the first exchange-cleared Texas solar Rec under the Center for Resource Solutions’ Green-e Energy programme. In the same month, Marex also added European biofuel capabilities to complement its existing US biofuels business.

Even as it expands into new markets, Marex has continued to offer deep liquidity pools in its traditional areas of coverage. This was especially useful during 2020. “Our customers really had to lean on our teams in these markets, particularly those with more episodic liquidity,” Elliott says. “Our aim is always to be able to go in and source the liquidity for our customers and we provided that consistency during a very volatile period in the markets.”

Georgi Slavov

The volatility seen in commodity markets last year left Marex clients wanting not only more in-depth market insight but also market intelligence on a greater number of markets, according to Georgi Slavov, global head of fundamental research at Marex.

“We noticed the interest in the light version of market commentary remained steady, but what increased was the level of detail required,” Slavov says. “In previous years, clients subscribed to our advanced analytical service for, on average, two markets; in other words, they were highly specialised. But from early last year we noticed this gradually increasing to three and four markets – adding weather, oil or coal to gas and electricity, for example.”

While Slavov believes a lack of contact due to increased remote working and travel restrictions at the height of the Covid outbreak played a role in this, he says it’s not the only reason.

“During periods of panic, markets almost stop behaving independently, they become increasingly interconnected,” he says. “This is also a gradual trend that we have seen for the past 10 years, especially in the power sector. Possibly, many clients expanded their business [last year] as a result of markets becoming more closely connected.”

For clients of Marex therefore, the launch of its new web-based platform Neon – in September 2020 following nine months of development – was great timing. Clients can use the platform to execute trades but also to monitor markets and access Marex’s research and analysis from one source, rather than receiving multiple reports via email. As a result, at a time when the market was searching for answers during unprecedented events, Marex clients had access to the brokerage’s proprietary research, analysis and commentary across more than 20 markets.

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