NEW YORK INTL FCStone Inc. is reviewing various scenarios that will result in the company leaving the physical base metals business, chief executive officer Sean OConnor told AMM.
"We have been working with the team to find the optimal way to realign our objectives, including a potential transition of the business as well as an orderly wind-down," he said.
The New York-based commodities broker, a Category I ring-dealing member of the London Metal Exchange, sees opportunities to expand other parts of INTLs business where it can earn much higher rates of return than in its physical base metals business. "As part of any business, we have to constantly re-evaluate our businesses, the resources and capital we put behind them, and consider that in light of where the opportunities are," OConnor said.
"Weve been in the physical base metals business for around eight years. It has been a big part of what weve done, and weve had years when it was extremely profitable for us," he said. "Of late, for a variety of reasons, the team focused on more plain-vanilla rather than niche physical business that had been much smaller but much more profitable on a per-trade basis. The returns on capital started to decline in that business."
The companys LME business, run by Fred Demler, is performing very well, OConnor said.
Meanwhile, the company is continuing to grow its physical precious metals business, he said, and is putting more resources into its physical agricultural commodities business, which has become one of INTLs fastest-growing divisions since its inception two years ago.
Sources familiar with the business consider that one potential new home for the team is Vision Bancorp LLC, a 27-year-old, New York-based asset management firm active in energy and commodities as well as healthcare financing.