J.P. Morgan has appointed Ray Eyles as chief executive officer of its Asia-Pacific commodities business, following the retirement of current CEO Oral Dawe. The appointment comes at a time when J.P. Morgan has started the process of downsizing all of its proprietary trading businesses globally. The downsizing is affecting the commodities business in particular.
Eyles will be responsible for J.P. Morgan’s 75-strong commodities front-office team in the region, which is based in Singapore, with additional offices in Tokyo, Sydney, Hong Kong, Beijing and Shanghai.
Dawe’s departure was anticipated, says a source close to the situation, as he had indicated that he would be pursuing interests outside J.P. Morgan once he delivered on his mandate to build a commodities platform in Asia. Under Dawe’s leadership, J.P. Morgan has tripled the revenue in its commodities business in the region over the past two years. The number of clients has grown 85% over the past 12 months, which has driven trades to new highs.
Globally, J.P. Morgan recently acquired carbon origination company EcoSecurities as well as select commodities businesses from RBS Sempra and expects further growth on the back of these acquisitions.
Eyles joined J.P. Morgan in 1988 and was most recently global head of commodity proprietary trading based in London. He has worked in Singapore twice previously during his career, including a two-year stint between 2005 and 2007 when he launched and developed the bank's Asian commodity business and ran parts of the foreign exchange business in the region. He has also been CEO of commodities for Europe, the Middle East and Africa, as well as head of the global metals and agricultural businesses.
Eyles takes on his new responsibilities at an interesting time, when his earlier commodities trading portfolio is being wound down. Eyles headed a business that had around 20 traders but is being downsized as part of J.P. Morgan’s drive to comply with the Volcker Rule, a recent US legislation that, among other things, curtails the ability of banks to trade on their own account.
During the bank's second-quarter earnings call on July 15, J.P. Morgan CEO Jamie Dimon was questioned about the impact the recent legislative changes in the US, including the reduced ability for proprietary trading, would have on the bank's profits. “I will just remind everybody that for J.P. Morgan Chase in particular, we have always thought about running ourselves as a client-focused business, not heavily dependent on proprietary activities, which is the main thrust of the ideas behind the legislation; we are not at all disturbed by [it],” said Dimon, according to a transcript posted on seekingalpha.
The Wall Street bank has committed to winding down its proprietary trading businesses but specialists wonder how this will pan out. Maintaining positions is critical to being able to provide clients with quotes and to make markets, and it may be impossible for J.P. Morgan and other Wall Street banks to completely wind down their trading desks. Further, investment banks have reaped windfalls from their trading desks in the recent past. In the aftermath of the credit crisis, banks that were on the right side of calls in the debt markets have been rewarded with large profits.