Letter to The Wall Street Journal regarding article published on 6 June, 2016

Christian Berthelsen’s WSJ article, Macquarie is now North America’s third-largest trader of physical gas (June 6, 2016) contains fundamental inaccuracies that we seek to correct.

Macquarie’s global commodities business is primarily focused on providing pricing, financing and commodity supply to customers. This business has operated for more than 30 years and represents approximately 10 per cent of Macquarie’s overall business. Its growth has no correlation to the recent regulatory environment in the U.S. In physical gas trading, Macquarie’s longstanding top five ranking in North America dates back to 2009.

While some U.S. banks may have scaled back their gas trading activities, others have in fact increased their activities. Many continue to operate substantial commodity businesses and have not exited the market, as Mr. Berthelsen suggests.

The article claims Macquarie is “one of the largest lenders to the U.S. energy industry of a particular kind” over the past five years, relying, we expect, on Dealogic leveraged loan data. Your correspondent fails to mention Dealogic ranks Macquarie 27th with 0.41 per cent market share over this period. These transactions are largely debt underwritings to U.S. utilities, waste and generation companies. The energy ECM underwritings referenced represent one per cent of the U.S. market.

The article also states Macquarie owns a number of utilities. This is not correct. The utilities to which the article refers are owned by third-party investors in listed and unlisted infrastructure funds managed by the Macquarie Infrastructure and Real Assets division. This is an asset management business and operates entirely separately from Macquarie’s commodities trading and financing division. The claim Macquarie has $US350 billion in assets is also incorrect, as is the claim half of these are in the Americas. This figure may be a reference to assets managed on behalf of investors by Macquarie Asset Management, for which Macquarie is paid fees. These assets are not owned by Macquarie Group.

While the article claims Macquarie benefits from regulation in the U.S., it fails to mention that Macquarie’s activities are heavily regulated within and outside the U.S. In addition to being subject to U.S. regulations in the financial and commodities markets, Macquarie is subject to significant prudential regulation by the Australian Prudential Regulation Authority (APRA, the Australian equivalent of the U.S. Federal Reserve). APRA imposes stringent capital, liquidity and risk management standards on Australian banks. APRA, before, during and since the Global Financial Crisis, has been regarded as an assiduous regulator particularly in regard to capital. Globally, Macquarie is regulated by approximately 200 regulators.


Patrick Upfold
Chief Financial Officer
Macquarie Group Limited