Commodity Dealing and Brokerage in the US
Revenue in the Commodity Dealing and Brokerage industry is driven by brokerage fees from facilitating the trade of commodities and commodity derivatives as well as earnings from buying and selling commodity derivative contracts. Industry revenue is projected to increase over the five years to 2019. During this period, the industry has experienced intermittent declines perpetuated by volatile commodity prices. However, in the present economic environment of rising interest rates and inflation, commodity prices have rebounded, making commodities an increasingly attractive investment vehicle as compared with equities and bonds. Over the five years to 2024, the industry is forecast to grow modestly. Projected increases in investor uncertainty combined with rising interest rates and inflation will increase demand for commodities as an investment vehicle and for commodity derivatives as a hedge for global operational risk. Regulatory pressures will continue to inhibit industry profitability and deter new entrants. However, improved transparency and the use of central clearing, which is designed to standardize swaps and mitigate counterparty risk, will fortify the reputation of commodities and commodity derivatives as reputable investment vehicles.
This industry includes operators and individuals who trade commodity derivatives. Commodity derivatives, such as futures, forwards, swaps and options, are financial securities that offer returns based on the return of an underlying commodity, such as agricultural products, energy resources and foreign currency. Brokers execute buyers’ orders by arranging transactions on a commission or transaction-fee basis, while dealers buy and sell derivatives on their own accounts for profit.
This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.
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