LONDON — Brushing aside the departure of senior executives in recent weeks, Newedge Group SA’s global head of fixed income, currency and commodities said the brokerage is committed to its metal business, its metal clients and the London Metal Exchange.
"We have the No. 1 metals business in the world, with approximately an 18-percent share of the LME market, and that is based on our platforms and our people," John Fay told AMM sister publication Metal Bulletin.
Fay and Michael Turek, senior director on Newedge’s New York metals desk, were speaking in the wake of the departures of global head of metals Mike Frawley—who is set to join Jefferies Bache Securities LLC—and Joel Spier and John Peiser in New York, as well as the resignations of Steve Pettitt and Mark Taylor in London.
"We have had a strong interest in the senior positions that have been vacated and have begun to interview for replacements, though we intend to take some time to assess exactly what we need," said Fay, who assumed direct responsibility for the metal team upon Frawley’s departure.
The developments that will result from the Dodd-Frank Act in the United States, liberalization in China and what Fay characterized as the "electronification" of metal markets worldwide would likely have necessitated some changes in any case, Fay added.
"Speaking as a front-line soldier that does answer the phone, I must say that even though people come and go, the bulk of our strong core global team has remained," Turek said.
Volumes transacted through the company’s electronic platform Metalsedge—or CN-Pulse, as it is known to clients of its joint venture with Beijing-based partner Citic Group Co.—and the brokerage’s floor team on the LME have increased in recent days, he said.
"Our goals haven’t changed: to offer price-efficient liquidity to our clients through our teams in New York and Hong Kong and our pre-eminent floor team in London, which is still led by Andy Patterson," he said.
Fay dismissed suggestions that Newedge’s ownership by two Paris-based banks—Crédit Agricole SA and Société Générale SA, which are generally understood to be facing some challenges as a result of the euro crisis—was hindering its business.
"We have not seen any significant attrition of our customers as a result of that," Fay said. "When customers say to me, ‘You have net capital of $2.2 billion on your balance sheet and JPMorgan has $11.4 billion,’ I respond by saying, ‘That $2.2 billion is basically just sitting there in a bank account to support customer activity; we do not run a principal trading book.’"
In contrast to banks and some other brokers, Fay added, Newedge does not take proprietary risk. "Proprietary trading is a significant risk and our clients appreciate the fact that we do not take it."
Newedge held $17.6 billion in segregated accounts for clients on April 30, according to U.S. Commodity Futures Trading Commission data, behind only Goldman Sachs Group Inc. ($19.5 billion) and JPMorgan Securities LLC ($18.8 billion).
"As you can see, we’re fully committed to all our businesses, particularly metals, and the fact that we’ve had a bit of staff turnover is neither here nor there," he added.