Increased automation and a new generation of hybrid trading systems are making it far easier for institutional investors to trade commodities ranging from energy and agricultural futures to emissions contracts. Systems developed and refined over the past half-decade enable portfolio managers to set criteria that route trades to be executed either automatically or by voice contact with a broker, whichever is likely to get the best result.

An easier-to-use trading environment could lead to “significant growth” for global commodities over the next several years, says Vincent van Lith, vice president of BHF-Bank, a German private bank that is one of the largest players in the European energy markets.

Two developments account for the wave of innovative hybrid trading systems, notes van Lith. First, the migration of almost all commodities contracts from traditional pit trading to the OTC market, essentially moving them into an electronic environment. The other factor was the 2008 global markets collapse, when many equity strategies crashed but commodities investors prospered.

That sparked new interest in commodities from pension funds and endowments, hedge funds and trading companies. For instance, IntercontinentalExchange, a firm that operates regulated global futures exchanges, clearing houses and OTC markets, recently reported average daily volume across all of its futures exchanges of 1.37 million contracts in November 2010 – up more than 25 percent from November 2009.