Barclays has recently announced that they have closed down their power trading desks in London and New York. Shocker? Not really. With the multitude of other bank exits we've seen, we cannot say we didn't see it coming. Additionally, Barclays has been reducing the size of its energy desk in moves prior to this news announcement.
As we've said in the past, these banking moves shrink the market's size and leave less liquidity and transparency. Even the head of Vitol has lamented the banks' leaving as they provided liquidity for people who are hedging.
These traders are not going quietly. We've seen a handful of hedge funds pop up from ex-banking sources. Besides them being more difficult to regulate (especially with them not always being in the US and Europe), these moves don't help liquidity and market transparency.
The already opaque commodity markets are not better off in this case.