One person's pain is invariably another's gain. It should come as no surprise, therefore, that commodities traders can give thanks to Amaranth Advisors in the coming bonus round.
"A couple of institutions have been on the favourable end off the Amaranth affair," says Jakob Bloch, managing director of search firm Commodity Appointments. "The good thing that Amaranth brought to the table was a lot of price movement, and that was beneficial to the whole trading community."
Thanks to Amaranth, commodities traders at Merrill Lynch and JPMorgan should have cause to celebrate this December. When both banks announced their third quarter results last week, they revealed big increases in commodities revenues after betting on the right side of the US hedge fund, which imploded in September after losing $6bn on natural gas trades.
Michael Cavanagh, JPMorgan's chief financial officer, reportedly described Amaranth as "a positive contributor" to JPMorgan's commodities trading results in the third quarter. And Merrill Lynch chief financial officer Jeffrey Edwards, highlighted natural gas bets as a contributor to surging commodities revenues - they were double their previous record.
Banks' traders aren't the only beneficiaries of the Amaranth's woes. Bloomberg reports that the London-based BP Capital Energy Commodity Fund has gained 120% this year after correctly anticipating movements in oil and natural gas prices.
However, one gas trader in London points out that most of the volatility (and therefore most of the bonus upside) related to Amaranth has been focused on the US market: "The only price movements we've seen in the UK have been in one direction - down."