Listen to this article
Give us your feedback Thank you for your feedback.
What do you think?
A mysterious group is exerting growing influence in commodities markets: the “other reportables”.
The vague term is a catchall for speculative traders that are not money managers published in a weekly report by the US Commodity Futures Trading Commission, a crucial market weathervane.
The reports, known as Commitments of Traders, provide information about the positioning in futures markets from oil to grain, across four categories: commercial companies, Wall Street swap dealers, money managers, and other reportables. Smaller investors are labelled “non-reportable”.
The higher share of traders labelled “other reportables” in recent years is raising concerns about transparency at some of the world’s biggest commodities traders including Citadel, the $27bn hedge fund run by Ken Griffin.
Citadel told the CFTC in a recent letter that “transparency has been impaired by a material increase in the number of positions that are being reported under the ‘other reportables’ and ‘non-reportable’ categories. This trend warrants inquiry.”
For US crude oil futures listed in New York, the share of open interest held by other reportable buyers has almost trebled in the past decade to 13.2 per cent, according to the CFTC data. Non-reportable “longs,” or buyers, comprised an added 4.2 per cent of the market.
In Chicago soft red winter wheat futures, the share held by other reportable buyers has more than trebled to 13.8 per cent, with non-reportables amounting to another 7.9 per cent.
Analysts believe that the growth in the other reportables category may reflect activity from proprietary trading firms, which bet on markets with their own capital, and certain commodity quantitative funds.
“There definitely needs to be more granularity in the ‘other’ category,” said an analyst at a global commodities trading house.
The CFTC declined to say whether it was reviewing its categories in light of Citadel’s concerns.
Olivier Jakob of Petromatrix, a Swiss-based consultancy, said: “It’s the only report that gives a little bit of a view about who’s doing what.”
Citadel is a significant player in commodities, one of five investment strategies at the Chicago fund group. This year it hired as head of commodities Sebastian Barrack, formerly of Australia-based Macquarie, which runs one of the biggest commodities trading operations in the banking sector. Citadel had no further comment.
Commitments of Traders reports have been published since 1962, before the CFTC was established. The commission has made changes to the reports over the years, including in 2009 when it split the number of large trader categories in the reports to four from two.