Setting up Physical Commodities Brokerage Firm - ADVICE NEEDED

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TheKoolio

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Hi Guys,

Firstly I know this topic isn't really for these forums however I need advice and no idea where to go.

Ive been interested in markets for a long time now and regularly spread bet and do stocks. As it happens I have many contacts in the commodities world, that includes a few people in mines and processing factories around the world in various things like Iron Ore, Sugar and Copper. I also have contacts in places that are end users, including steel mills, wire manufacturers and large bakeries.

Now I know both sides can satisfy needs for each other therefore I wish to start exploring trading between the two. Rather than link the contacts for a commission and step back, I would like to explore setting a brokerage firm up and explore if there is a future for this. I have the time and basic funds to start a firm however my query is this:

Are there any licences and qualifications that are needed to discuss commodities trades between two parties, including the transport, duty and insurance? I am aware of series 3 for futures etc, but with regards to physical trades contracted over a monthly to yearly period, are the same needed? I have many friends in futures however I wish not to ask them as I know they have no experience with regards to my query.

If not then I would incorporate a company immediately and begin exploring this world, however licences and qualifications would obviously mean I will need to put longer time and effort in. I am in contact with a decent solicitor to help me put together NDA contracts and also have guidance on LOI, FCA and final agreements. I will however need assistance with banking needs, I will explore this after the licence part is taken care of.

Any help would be much appreciated, I have a few friends interested in working for me in the best case scenario so I can guarantee hard work and effort. I also have the 'balls' and out of the box thinking to contact new clients with or without cold calling and marketing myself.

Many thanks guys!
 
Koolio,

I just came across your thread and I'm interested to know how far you have gone regarding your brokerage firm.

I am also extremely interested in physical commodity trades setting up a firm to gain some experience about a year ago.

It has been tough and I have learnt a lot but as we all know success doesn't come easy!

As far as your request goes, I doubt if you need any qualifications to set up shop. I will do the CAIA level 1 exam in September and I'm sitting for the CISI Commodity Derivatives exam soon but that's really all to be honest. I believe anything to make you fit and proper in front of the FSA will suffice however thats if your handling other people's money. If you are trading with your own money I believe the FSA really have no business snooping around.

I have looked at some commodity trading firms in London and majority of them are FSA regulated (Your bank may give you a tough time if you are not regulated in setting up a business account). Since our industry is perhaps 'secretive', most firms are located in Geneva so there is no definitive answer on what you should and what you should not have.

A good solicitor should be able to help you out preferably one that works with a hedge fund.

From my experience, the way to success in this industry is your street smarts, team and connections. I also do advise that you have a look a Marc Rich's new book ''The king Of Oil" which can be purchased via Amazon.

http://www.amazon.co.uk/King-Oil-Se...=sr_1_1?ie=UTF8&s=books&qid=1301396664&sr=8-1

(I love to read so if you have any reading suggestions please let me know!)


Good Luck.

Regards,

Sirtomz

P.S Sent you a PM with my email addresses if you wish to chat further. We may be able to work together.

TheKoolio said:
Hi Guys,

Firstly I know this topic isn't really for these forums however I need advice and no idea where to go.

Ive been interested in markets for a long time now and regularly spread bet and do stocks. As it happens I have many contacts in the commodities world, that includes a few people in mines and processing factories around the world in various things like Iron Ore, Sugar and Copper. I also have contacts in places that are end users, including steel mills, wire manufacturers and large bakeries.

Now I know both sides can satisfy needs for each other therefore I wish to start exploring trading between the two. Rather than link the contacts for a commission and step back, I would like to explore setting a brokerage firm up and explore if there is a future for this. I have the time and basic funds to start a firm however my query is this:

Are there any licences and qualifications that are needed to discuss commodities trades between two parties, including the transport, duty and insurance? I am aware of series 3 for futures etc, but with regards to physical trades contracted over a monthly to yearly period, are the same needed? I have many friends in futures however I wish not to ask them as I know they have no experience with regards to my query.

If not then I would incorporate a company immediately and begin exploring this world, however licences and qualifications would obviously mean I will need to put longer time and effort in. I am in contact with a decent solicitor to help me put together NDA contracts and also have guidance on LOI, FCA and final agreements. I will however need assistance with banking needs, I will explore this after the licence part is taken care of.

Any help would be much appreciated, I have a few friends interested in working for me in the best case scenario so I can guarantee hard work and effort. I also have the 'balls' and out of the box thinking to contact new clients with or without cold calling and marketing myself.

Many thanks guys!
Click to expand...
 
I've PM you futher information, thank you for your reply. If you like reading I could suggest a book Im reading atm called CityBoy: Beer and loathing in the square mile. Its by Geraint Anderson, a very good read!

Thanks for detailing the given exams, ill look into those further.
 
is there more money trading yourself? And why trade real commodities unless you have a real need to get involved in supply and demand?

But this does appeal to me to... get an IMC done if no offical back ground and then do a CAIA... thats what i plan to do...
 
Hello Koolio,

I am very much interested in physical commodities trading as well.

I have actually set up a company but haven't closed a deal yet.

I have done a lot of research into the business so I am relatively knowledgeable about the trading intricacies.

However, I do struggle to get supply aligned with demand at the exact same time.

Maybe we could work together. Let me know what you think.

Oh yeah, I am UK based as well.



TheKoolio said:
I've PM you futher information, thank you for your reply. If you like reading I could suggest a book Im reading atm called CityBoy: Beer and loathing in the square mile. Its by Geraint Anderson, a very good read!

Thanks for detailing the given exams, ill look into those further.
Click to expand...
 
Hi I also owns a physical commodities brokerage firm in Indonesia, a bit hard, we should be cautious in order to hit a deal. You need make sure your end buyer is in the line to procure the goods and vice versa your mining or etc. what you called it, also have a ready stock or at least they can start the production as soon as they requested by your end buyer through you. Message me if you want to work together, as you might know, Indonesia owns much resources especially in the steam or thermal coal.
 
I'm also in the same boat, but I deal primarily with Crude, distillates, Iron ore , coal. I only deal with majors, so let me know. Perhaps we could do something. Send me your email please.

TheKoolio said:
Hi Guys,

Firstly I know this topic isn't really for these forums however I need advice and no idea where to go.

Ive been interested in markets for a long time now and regularly spread bet and do stocks. As it happens I have many contacts in the commodities world, that includes a few people in mines and processing factories around the world in various things like Iron Ore, Sugar and Copper. I also have contacts in places that are end users, including steel mills, wire manufacturers and large bakeries.

Now I know both sides can satisfy needs for each other therefore I wish to start exploring trading between the two. Rather than link the contacts for a commission and step back, I would like to explore setting a brokerage firm up and explore if there is a future for this. I have the time and basic funds to start a firm however my query is this:

Are there any licences and qualifications that are needed to discuss commodities trades between two parties, including the transport, duty and insurance? I am aware of series 3 for futures etc, but with regards to physical trades contracted over a monthly to yearly period, are the same needed? I have many friends in futures however I wish not to ask them as I know they have no experience with regards to my query.

If not then I would incorporate a company immediately and begin exploring this world, however licences and qualifications would obviously mean I will need to put longer time and effort in. I am in contact with a decent solicitor to help me put together NDA contracts and also have guidance on LOI, FCA and final agreements. I will however need assistance with banking needs, I will explore this after the licence part is taken care of.

Any help would be much appreciated, I have a few friends interested in working for me in the best case scenario so I can guarantee hard work and effort. I also have the 'balls' and out of the box thinking to contact new clients with or without cold calling and marketing myself.

Many thanks guys!
Click to expand...
 
If you have contacts, which are the gold dust of the industry, why not get a job in an established firm, contacts are going to assure at least one person will give you an opportunity to work a desk. You will get a reasonably decent base salary and potential to earn big commissions if you are good and learn the industry from within an established company you will be in a far better position to go it alone.

Also one of the biggest hurdles in the cash market is getting people to not only trust you but the clients you represent, the way around this is to become a member of the leading government body in whichever industry you are broking, i worked as a veg oils broker for a while and FOSFA was the agency you would need to be a member of to be eligible for any insurance deals against clients reneging on a deal.

As a third option there are "broker prop firms" setting up where you can rent a desk in a brokerage firm and have access to all technology etc as the other brokers and you keep most of your commission, the company earns the rent on the desk and a small cut of your revenue. I dont know any names though i am on the trading side of the industry now.
 
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