Commodity broker Marex posts record profit on market surge

London-based brokerage Marex Group posted a record profit last year as costs for energy, metals and agricultural products took off as economies reopened after pandemic lockdowns. The commodity boom has fueled stellar results for home exchange and helped brokers create markets and execute trades. Costs have risen dramatically since Russia invaded Ukraine, with a list trailing spot futures up 31% so far this year. This puts pressure on dealers and their customers in the form of margin calls which can suddenly drain cash reserves. Pretax benefit in 2021 rose 29% from a year earlier to $79.6 million, while revenue hit a record $543 million.

This year is off to a “very good start,” Lowitt said in an earlier statement, with the company set to benefit from rising interest rates. When companies deposit cash with brokerage houses as collateral for trades, some of that money is invested in deposit accounts or securities such as treasury bills, which pay a higher rate of return when rates rise. .

“Commodity price volatility only creates demand for our services,” chief executive Ian Lowitt said in an interview on Wednesday. “While there are undoubtedly tensions created by the liquidity sitting on the exchanges, the fundamentals of our business remain in place and strong.”

Raising interest rates by around 1% could generate around $30 million in additional earnings, CFO Paolo Tonucci said in the interview.

“It’s on the table, but there are no plans at this time to do anything,” he said. “If there are no other alternatives, we would be happy to come back.”

The company shelved plans for an IPO last year and instead acquired Volcap Trading and Arfinco – deals that propelled Marex into the grain and commodities brokerage space. A step back could occur if global markets stabilize, Lowitt said.

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  • Commodity broker Marex posts record profit on market surge
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