Mercuria Unit to Be Regulated by FCA as JPMorgan Purchase Nears
Sept. 22 (Bloomberg) — A European trading unit of Mercuria Energy Group Ltd. will be the first in the group to be regulated by the U.K.’s Financial Conduct Authority as the company seeks to expand services in the region’s financial commodity markets.
Geneva-based Mercuria, nearing completion of a $3.5 billion deal to buy JPMorgan Chase & Co.’s physical commodity operation, said in an e-mailed statement that Mercuria Europe Trading Ltd. is now authorized and regulated by the FCA under the Financial Services and Markets Act 2000.
As independent commodity traders like Mercuria have bought businesses including physical assets, they seek new sources of capital including through bond sales. Such financing needs has prompted the traders to increase their disclosure after decades when the closely held firms operated in relative secrecy.
“As Mercuria’s business model continues to evolve to expand its provision of services, so too does the regulatory oversight of Mercuria,” Victoria Attwood Scott, the firm’s head of compliance, said today in an e-mailed statement.
Attwood Scott, a former Goldman Sachs Group Inc. executive, said in April that Mercuria was in discussions with the FCA to determine whether the purchase of JPMorgan’s European gas and power operations would require regulatory oversight by the U.K.
Founded a decade ago by former Goldman Sachs traders Marco Dunand and Daniel Jaeggi, Mercuria is growing faster than Trafigura Beheer BV, Gunvor Group Ltd. and Vitol Group, the world’s largest oil trader. As investment banks such as JPMorgan pull back from physical commodities because of rising regulatory scrutiny, Mercuria is seeking to combine such operations with investment bank-style commodity futures and options trading.
Non-governmental organizations like Switzerland’s Berne Declaration have decried what they call a gap in regulatory oversight over traders like Mercuria, which recorded revenue of $112 billion in 2013. The firm and other traders have said their businesses are already subject to regulation through exchange- traded options trading and oversight of their banking partners.
“Mercuria has always been subject to regulations and oversight across the globe in all of its activities and takes these responsibilities very seriously,” Attwood Scott said in the statement. “As such, Mercuria views this development as an extension of its existing obligations and regulatory relationships as we broaden the scope of our business.”
To contact the reporter on this story: Andy Hoffman in Geneva at ahoffman31@bloomberg.net To contact the editors responsible for this story: Will Kennedy at wkennedy3@bloomberg.net Tony Barrett, Dylan Griffiths
