Broker suffers after BMO commodity losses

The bank suffered losses of between C$350 million and C$450 million last month on natural gas trading, after a sudden drop in market liquidity and volatility. It has now announced that it is "suspending all of its business relationships with the brokerage firm, Optionable, as well as all derivatives trading through that firm". The bank has also suspended two commodity traders and will tighten up oversight of the commodities desk in its BMO Capital Markets division.

Optionable, based in Valhalla, New York, saw its shares fall 60% today to $1.126. But chairman Albert Helmig said: "We are never pleased when losses dominate for one of our clients, but we do not design or help to design their strategies, nor are we financial advisers.... We believe strongly that our brokerage and execution services are and have been rendered appropriately, professionally and correctly."

In a filing with the SEC yesterday, Optionable said that "it is likely that BMO’s statement and suspension will have an adverse effect on the Company’s business". Optionable could also suffer from increased competition now that Nymex has launched electronically traded energy contracts (see Nymex launches electronically traded options on energy and base metal contracts), which could compete with contracts on Optionable's Opex trading platform.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact or view our subscription options here:

You are currently unable to copy this content. Please contact to find out more.

You need to sign in to use this feature. If you don’t have a account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here