Hot job market for commodity traders - SAIJEL KISHAN

JPMorgan Chase & Co., Lehman Brothers Holdings Inc. and BNP Paribas SA say oil, wheat and metals traders are Wall Street's hottest commodities.

Banks and securities firms hired a record 450 people for commodities this year, up 33 per cent from 2006, according to Options Group, the New York-based recruitment and consulting firm that has tracked the industry since 2002.

While the increase is equal to only 3.4 per cent of the 13,100 new hires in the securities industry last year, commodities traders are so coveted that headhunters are turning to fired mortgage bond salesmen to fill the help wanted.

Lehman doubled its commodity unit to 200, and JPMorgan added 45 to bring its total to 170, including Foster Smith from Deutsche Bank AG as head of U.S. power and gas, and Andrew Harrison from Goldman Sachs Group Inc., where he traded oil.

The subprime mortgage defaults that led to $21-billion (U.S.) in losses at securities firms, according to data compiled by Bloomberg, are having no impact in commodities, where hiring is increasing faster than ever, said Blythe Masters, the global head of commodities at JPMorgan.

Revenue from commodities may rise 20 per cent this year to a total of $15-billion at the world's 10 largest securities firms, said Ethan Ravage, a financial services industry consultant in San Francisco. Rising prices for oil, grains and metals are stoking demand for traders even as Wall Street firms eliminate more than 2,300 jobs because of slowing U.S. growth and the worst housing slump in 16 years.

"There's no question that competition for talent over the last few years has increased and is peaking right now," said Charles Watson, 57, the co-head of global commodities at New York-based Lehman, and former Dynegy Inc. chairman.

Lehman, the largest U.S. arranger of mortgage-backed bond sales, this year hired Jeff Frase and Roy Salameh, two energy traders from Goldman Sachs. Lehman said this month it's firing 850 people at its Aurora Loan mortgage business.

Trading in oil and gas is growing twice as fast as in the 1990s, when Enron Corp., then the world's largest energy-trading company, led a boom in demand for energy contracts, data on the New York Mercantile Exchange website show.

Oil has advanced 44 per cent this year on the Nymex, topping $88 a barrel.

Agricultural commodities trading at the 159-year-old Chicago Board of Trade has increased 26 per cent this year.

Headhunters say they expect people who lose jobs in fixed-income departments to seek employment in commodities. Paul Chrispin, a recruiter at Principal Search Ltd., who has been placing traders in the industry for eight years, said in an interview from London he's never been busier.

To be sure, commodities profits are unlikely to make up for all the losses in fixed income.

The $15-billion revenue from natural resources forecast for the biggest firms this year barely surpasses Goldman Sachs's $14.3-billion of revenue last year from fixed income, currencies and commodities, according to data compiled by Bloomberg.

Profit at Goldman Sachs will rise 16 per cent in 2007 to $11.1-billion, the slowest rate of growth since 2002, according to analysts' estimates.

Morgan Stanley's profit will increase 13 per cent to $8.4-billion, beating the 10 per cent gain in 2005, according to estimates compiled by Bloomberg. Both firms are based in New York.

Morgan Stanley said Oct. 2 that it's eliminating 600 jobs, or 25 per cent, of the positions in its residential mortgage origination and servicing unit in the wake of the subprime collapse.

The company hired 40 to 50 people through July this year in commodities, bringing the total to about 320, according to Marc Mourre, global head of commodities marketing in London.

UBS, Europe's largest bank, announced 1,500 job cuts on Oct. 1 because of hedge fund losses and writedowns related to subprime securities.

The Zurich-based firm has expanded its commodities group 60 per cent during the past two years, mainly by transferring people from other teams, Peter Ghavami, 39, global head of the unit, said in an e-mailed response to questions. He declined to say how many people UBS employs for commodities.

Deutsche Bank, Germany's biggest bank, doubled its commodities team this year, according to David Silbert, the global head of commodities who joined the bank this year from Merrill Lynch & Co.

Commodities traders are taking more control at the firms, where the top positions are typically held by the people who bring in the most profit.

David Sobotka, 51, the global head of commodities at New York-based Merrill, was put in charge of fixed income, currencies and commodities this month.

Neal Shear, 53, a former energy trader, was given the same role two years ago at Morgan Stanley, the second-largest securities firm by market value.

The chief executive officer at Goldman Sachs, the biggest investment bank, is Lloyd Blankfein, 53, who started his career as a gold salesman at J. Aron & Co., the commodities unit.

Compensation has swelled along with commodities prices. Mr. Shear earned $35- million at Morgan Stanley in 2006, more than the $30-million paid to his boss, co-president Zoe Cruz, 52, according to the company's proxy statement filed with the U.S. Securities and Exchange Commission. Only chairman and CEO John Mack's $41.4-million compensation was higher.