Its far too early to call time on the banks, however. Sources at Mercuria say theres no prospect of challenging the supremacy of banks in the market and stress that Jones wanted to rejoin Marco Dunand and Daniel Jaeggi, Mercurias co-founders, with whom he worked at Phibro, the former Salomon Brothers energy unit now owned by Occidental Petroleum Corp.
Banks are struggling to hang on to their star commodities traders. In May the London-based global head of commodities at Barclays Capital, Roger Jones, caused a stir by resigning to join privately owned Geneva trading giant Mercuria Energy Group. Jones is hardly alone. Over the past two years, a number of traders have been leaving big banks amid a tightening regulatory environment, as Basel III forces banks to conserve capital and the Volcker rule nudges them out of proprietary trading. The senior people have until now been favoring hedge funds. Diego Parrilla, formerly head of commodities in Asia at Merrill Lynch, left last year to form a hedge fund called Nareco Advisors in Singapore. Theres been a talent drain to the trading houses, says Seb Walker, managing partner at British research firm Tricumen.