Growth case in Investment Banking:
Delivering a new physical commodity trading business
Expanded commodity derivatives trading to include physical trading, including a new legal entity and an operating model designed to capitalise on existing infrastructure and support functions.
Key results
- New trading business in just 12 months
- New legal entity in a new geographical area
- New office, funding model & trading staff
- New operating model with 14 Service Level Agreements
- New trading and risk management system
Who is this case for?
- Multinational Investment Banks and Energy Trading firms
- Mid or Big size companies
- Commodities Trading; C-level and Business Management
Summary
The investment bank aimed to expand its existing commodity derivatives trading to include physical trading.
Regulatory constraints mandated the establishment of a new legal entity within the existing corporate structure.
The goal was to capitalise on existing customers and leverage existing infrastructure and support functions for maximum efficiency.
Key challenges
- Launching a new commodity trading business within 12 months, encompassing key decisions on various operational aspects.
- Geographic location, funding model, and selection of new trading system, needed to be addressed promptly.
- Engaging stakeholders and securing ongoing management support for new and unfamiliar tasks are critical throughout the process.
The ask
Deliver a Turn-key project: manage from analysis through design and implementation, addressing both business and technical issues.
To guide and train management on strategic, business, and technical matters for a seamless transition into a new physical trading business.
Build the right team: ensure collaboration between external resources and internal teams for smooth transfer and ownership.
Define and implement a new Target Operating Model to capitalise on existing infrastructure and support functions.
Delivery in just 12 months and on budget
Including a new legal entity in a new geographical area, a new fully equipped office, and a new funding model
With 14 SLAs with internal support functions, new infrastructure, and a new trading and risk management system.
Success is in the approach
To deliver a complex project with the right quality, on time and within budget, the composition of the project team must also be well thought through.
In this case it was important to involve internal resources to ensure an effective transfer of ownership back to the organisation at the end of the project.
A good understanding, genuine commitment, and ownership are always important ingredients in large-scale projects, especially when a new type of business is being introduced.
The foundations for this were mainly achieved by investing time in advance for:
- Meeting and getting to know the key stakeholders and their requirements.
- Tailoring the project and governance structure.
- Planning the internal project communication
Key Learnings
Guide and align key stakeholders
Ensure understanding, commitment, and provide confidence to take on a new business
Engage stakeholders
Promote collaboration in the project, to ensure progress, and comfort when transferring ownership
Choose the right team
Guarantee the right external resources with hands-on experience to lay the foundations
Optimize time
Promote working in parallel on different streams for time and resource optimization.
CommodityFirst
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