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Barclays PLC and agricultural commodity derivatives report
This report, written by Brett Scott on behalf of WDM, is an overview of Barclays' involvement in commodity derivatives markets, with particular reference to its involvement in agricultural commodity derivatives (food speculation).
Derivatives come in three main types: Futures/forwards, options and swaps. In practice, a lot of the dealing on investment bank trading floors will be in ‘over-the-counter’ (OTC) derivatives, which includes forwards, swaps and bespoke options. Futures are slightly different, in that they are traded on regulated exchanges. All these derivative types can be based on different ‘underlying assets’ - e.g. derivatives based on shares, bonds and currencies, economic indicators, and a lot of other things. By far the largest global derivative market is the interest rate derivatives market, followed by currency derivatives, credit derivatives, commodity derivatives, and equity derivatives.
Barclays Capital commodities division is a commodity derivatives business, facilitating derivative markets in energy commodities (e.g. oil, oil distillates, natural gas, coal), industrial metals, precious metals, carbon emissions, and agricultural commodities. There are roughly 350 employees. Barclays describes the business as follows:
Barclays Capital’s Commodities division has expanded rapidly in recent years to meet growing customer demand. Our Commodities Traders build ‘trading books’ specialising in goods from energy products to agricultural assets, all over the world.