Broker GFI Group is restructuring its European carbon business, under which it will not have a dedicated London-based desk anymore, according to one source with knowledge of the matter.
The company has restructured and will concentrate more on the carbon options market, the source said, and these will be managed by people in other teams.
GFI Group would not confirm the restructuring plan, but told ICIS: “We continue brokering EU carbon from Europe. Products brokered do include certified emission reductions and emission reduction units,” a spokeswoman said. EU allowances are also included in the list.
The move comes at a time when carbon volumes traded over-the-counter via brokers are plunging, as more liquidity migrates towards the main ICE exchange and amid a general liquidity decrease.
EU carbon volumes traded via brokers within the London Energy Brokers’ Association (LEBA) – which includes GFI Group, Evolution Markets, ICAP, Marex Spectron, Tradition Financial Services and Tullett Prebon Energy – have declined by 13% to 1.5bn EUAs in January-September. In the third quarter, however, volumes fell more steeply than in the first half, declining by 65% year on year to 229.9m.
A LEBA analyst told ICIS earlier this month that the main reason for the decline was banks’ lower risk appetite for proprietary trading on the back of higher capital requirements ( see EDCM 17 October 2013 ). Silvia Molteni