A panel of executives noted that the departure of the banks and the retreat of other risk-takers and price-makers, such as hedge funds, meant they had been forced to be far more selective in the trades that they placed.
“The cost of execution has become more expensive, the increase in London Metal Exchange fees has been a burden to many market participants, and we’ve seen a big departure from the banking sector which has taken a big portion of risk takers out of the market. As a consequence, we’ve seen a lot less liquidity,” Paul Crone, cio and founder of hedge fund Citrine Capital Management, said.
This has meant a sharper focus on entry and exit costs, which have become more expensive as bid-ask spreads have become wider, and a resultant change in approach to a trade, he noted.
“We’ve tried to approach things by trading slightly less and looking...