Shell, BP call against excessive oil trading regulations

The Royal Dutch Shell on Wednesday joined fellow oil company, BP, in calling on European regulators to refrain from imposing stricter capital requirements and greater disclosure measures on oil trading.
In April, the head of BP’s trading division, Paul Reed, said some markets could be exposed to severe stress because of some looming EU regulations.
Mike Muller, Vice President for trading at Shell, sided with Reed’s views on Wednesday, saying regulators would achieve undesired effects, if companies and trading houses were forced to follow stricter capital requirement rules.
Muller said it would be detrimental if restrictions limited the ability to trade derivatives.
European authorities will implement a set of regulations known as the Markets in Financial Instruments Directive (Mifid II) in 2017.
It contains Capital Requirement Directive (CRD IV) aimed at cutting systemic risks across equity, fixed income and commodity markets.
“They (trading desks at trading houses and oil majors) don’t operate banking licences. They are not involved in lending activity.
“A failure of a commodity firm is unlikely to lead to a bank run,” Muller told the Platts Crude Summit in London.
Both BP and Shell trading divisions employ hundreds of people and trade millions of barrels of oil and refined products per day.
Shell will become even bigger when it finalises its acquisition of smaller rival BG.
Muller also called against introducing limits on derivatives’ trading – known as position limits – across the industry.