Dubai's Trading Hub Attracting London Traders

Commodity traders in London are following some of their Swiss counterparts to Dubai, which has long sought to attract more commodity traders by investing in banking infrastructure and developing exchange-traded futures.

While London has a much larger commodities presence, more energy traders are now relocating or expanding to Dubai. They are enticed by the growing pool of merchant counterparts as well as low taxes at a time when traders are earning unprecedented bonuses. Dubai also provides other lifestyle benefits, which are becoming increasingly important in attracting top talent.

According to people familiar with the matter who asked not to be identified, Hartree Partners LP and Freepoint Commodities LLC are among those who have relocated energy traders and senior executives to Dubai in the last year. It demonstrates how historic trading centres such as London are beginning to lose ground to the emirate's growing appeal.

It is also part of a larger boom in Dubai and the UAE, which has benefited from an influx of foreign wealth. Property prices have risen due to the influx of crypto millionaires and bankers relocating from Asia.

"We've seen well-known hedge funds as well as independent commodities merchants open offices in Dubai recently," said Jonathan Funnell, a partner at executive search firm Sidley Marion. "The tax benefits are obvious, but some believe Dubai is well positioned to become a major commodities trading hub."

For decades, Dubai has courted commodity companies, and in 2002, it established a free-trade zone. Since then, it has introduced oil and gold contracts, and regional banks have expanded their offerings to finance trade flows.

For European power and gas traders, the time zone means no early morning starts and the opportunity to keep more earnings at a time when the sector is booming. Dubai also benefits from its proximity to some of the world's largest producers of oil and gas, such as Saudi Arabia, Abu Dhabi, and Qatar.