TP ICAP: leveraging a unique vantage point

Market intelligence is key as energy traders focus on short-term trading amid uncertainty, writes Stella Farrington

It has been a dizzying few months across financial and commodities markets, as traders try to navigate an ever-changing policy landscape. A darkening macroeconomic picture is putting pressure on energy prices, while looming trade wars and geopolitical unrest threaten to send shockwaves through every commodity that moves over international borders – and many that do not.

All of this is injecting volatility and unpredictability into day-to-day trading, putting a premium on the role played by commodity brokers – vital intermediaries who do much more than simply access liquidity. In uncertain markets, a good broker will provide insights into wider market sentiment and offer advice and support that goes beyond matching a bid with an offer.

Over recent decades, ICAP has been a fixture within physical and derivative commodities markets. The company was named Commodity broker of the year in Energy Risk’s 2025 awards and, with its sister firm Tullett Prebon, took a raft of first and second placings across this year’s Energy Risk Commodity Rankings.

The two firms – ranked numbers 1 and 2, respectively, in the overall Commodities broker leaderboard – made particularly strong showings in the natural gas and power categories.

Energy Risk spoke to TP ICAP’s co-CEOs of energy and commodities, David Silbert and Joachim Emanuelsson, to uncover how the firm and its clients are approaching a rapidly changing marketplace.

How are your clients in the energy markets coping with current market conditions, and how is it changing how you are working with them?

David Silbert: The issues they are dealing with in gas and power are no different than we see across the commodities complex. We’ve gone from what are usually fundamentally driven markets to ones driven by headlines and vacillating policy. We’re seeing the same thing in oil, where the markets are choppy and deviating from the fundamentals. Our clients have gone from long-term, strategic decision-making to very short-term trading of volatility. They’ve had to adapt to a shorter-term trading horizon, and we’ve had to adapt to ensure they have the transparency and liquidity they need to trade these markets.

Has that changed your clients’ expectations, and the sort of service you need to provide as an energy broker?

David Silbert: The volatility has certainly been a factor, but it hasn’t been the sort of volatility that disrupts markets. We’re still seeing a lot of activity, and the markets are functioning very well; liquidity hasn’t dried up. People just have to change their time horizon a little bit, until things become more predictable.

Some traders are also finding that markets are more correlated than they assumed. Natural gas and, by extension, US power markets are not immune to wider fluctuations in equity and bond markets. The natural gas industry tends to assume its market is something of a closed system, particularly in the US, which reacts more to fundamentals and trade flows than to political headlines and macro factors.

But natural gas has a pretty high correlation with the S&P 500. That’s a result of flows of money. It’s risk-on and risk-off, which moves money in and out of commodities, including natural gas. If you’ve been in these markets a while, you know you need to have a macro view as well as a view on the fundamentals. If you’re fairly new to the market, you’ve probably just learned a valuable lesson.

Current policy-driven volatility notwithstanding, what is your fundamental view on the outlook in gas and power?

Joachim Emanuelsson: In Europe, we are fundamentally very bullish on power, given what’s going on with the transition to a low-carbon economy. Not only is power fundamental to that, so too are the commodities that go into producing it: gas, steel, iron ore, copper, nickel, lithium, and so on. That whole complex is key to our power and gas business in Europe.

David Silbert: Obviously the US is in a different place to Europe, and we’re starting to see some states react to the change in the federal approach to climate. From a legislative standpoint, I think there is going to be a bit less appetite to force increasing carbon targets on corporates. It doesn’t mean we won’t see a lot of activity in the market, whether in renewable energy certificates or carbon, but it just won’t be through mandated requirements.

Frankly, if we go into an environment where renewable energy is less attractive from a regulatory or subsidy standpoint, that’s going to have an impact on increasing power prices at the back end of the curve. We’re going to have significant load growth in the US and, if that load is going to be supplied from natural gas or nuclear, it’s going to be more costly.

To what would you attribute your success in this year’s Energy Risk Commodity Rankings?

David Silbert: We’ve established ourselves in the US markets for quite a while. We have people who have been involved for 15 or 20 years. The other thing that differentiates us from some of our competitors is our options capabilities: as options markets developed, we were there helping develop them.

In options markets, there is more opportunity for a good broker to differentiate themselves. Rather than simply match the obvious trade, they might be able to identify a different trade that meets the client’s needs but with better volatility, better skew and better dynamics.

Joachim Emanuelsson: This is where a broker can add value to the relationship – by having an informed, intelligent discussion with the trader. Those are conversations we are well suited to have.

We’ve come off several years of growth, where all the trading houses have been making strong profits. But clients’ needs in commodities change with the cycle. What we do really well is make sure we’re listening and adjust our service to those needs.

ICAP took first place in weather derivatives. As a long-standing player in that market, how do you see it evolving?