MTX Capital Services – commodity trading partner

MTX Capital Services is one of the newest companies in MTX Group. Established in 2020, it specializes in commodity derivatives trading. MTX Capital Services sets prices of raw materials for other companies in our group. After obtaining a license from the Czech National Bank, it will do the same for external customers, too.

METALIMEX used to carry out this activity in the past, but the responsibility has now been transferred to MTX Capital Services, with the ambition of primarily supplying these services to external clients outside of the group. “The idea was that because of the trading volume and since we have experience in this field, we can take over these services from METALIMEX and let them concentrate on trading with physical commodities,” says Ondřej Hamer, Vice-Chairman of the Board of Directors and the brains behind this idea. However, Hamer says it is no easy feat. “Without a license, we can only hedge commodities for our group, which is what METALIMEX has been doing so far. But to supply these services to external clients, we need a license from a regulator, i.e., the Czech National Bank,” Hamer explains, adding the company applied for the license shortly after its establishment in July of 2020. “Obtaining this license is a complicated process; granting it is fully within the hands of the CNB. If they see any obstacles in our company, they will not grant us the license,” Hamer comments. The regulator must thoroughly examine the company and even go through the qualifications of individual employees or assess if they have enough time to do their jobs. “Asking the CNB to grant a license to someone who is wearing two hats, so to speak, would be pointless. We would not get it,” Hamer says.

We have experience and we can use it for the benefit of clients outside of MTX Group

Currently, MTX Capital Services has a dozen employees and plans to hire more. In addition to having suitable human capital, the licensing process also evaluates business plans for the upcoming three years or strategies for saving the company in case of a market collapse. “We had to comply with numerous regulations, provide an enormous number of documents, and we are obliged to report our activities in detail,” Hamer explains. In his opinion, this strenuous process is definitely worth it. “In the Czech Republic, banks don’t pay much attention to trading commodity derivatives. In fact, they completely avoid this segment, so we believe we have great market potential,” Hamer says, explaining one of the reasons MTX Capital Services was founded. He adds that MTX Capital Services has competitors in the Czech Republic; however, they will not pose a significant threat initially, since commodity hedging is a relatively risky business. “Experience in this area is not very common. But we have it and can use it for the benefit of MTX Group and of our clients,” Hamer highlights. Even during the short time since it was established, the company has already been reminded of what a dynamic and relatively difficult area it specializes in. The original plan was to trade derivatives on the London Metal Exchange (LME), but Brexit ultimately thwarted this plan. “The Brexit deal makes it simply impossible for us to enter LME directly, so we had to reconsider,” Hamer explains. Instead, MTX Capital Services has started trading on the Chicago Mercantile Exchange. MTX Capital Services will help clients resolve issues with fluctuating commodity prices on global markets. Specifically, the company specializes in price hedging of metals such as aluminum, nickel, lead, tin, zinc, and copper. Hamer points out, too, that for clients to be able to use their services, they themselves must meet several strict requirements. “The license for operating on the financial market also places requirements on the clients. For example, we have to review established rules and measures against money laundering, approve the hedging operation by the Board of Directors and so on,” Hamer explains. In his opinion, the clients of MTX Capital Services should also include, in addition to the “internal” customers, industrial companies using non-ferrous metals for production. Hamer plans to acquire the widest possible portfolio of customers from the area outside the group. “This will allow us to trade with a competitive pricing policy. We want to be a really interesting and useful company for our customers,” Hamer says, adding that the true potential of MTX Capital Services will only be revealed after the first year of operation.