If there was any confusion about what may be coming next, now that the bulk of the TBTFs are liquidating their commodities trading divisions having been caught manipulating virtually every physical asset under the sun (except for Goldman: the bank will first stage a mutiny at the Fed before it is forced to spin off its legendary J Aron commodity group which spawned such taxpayer generosity recipients as Gary Cohn and Lloyd Blankfein), the most recent events at Swiss commodities giant Mercuria should clarify "next steps."

After Mercuria two months ago acquired JPMorgan's physical commodities trading business for $3.5 billion, however without retaining the services of the scandal-plagued Blythe Masters, the Geneva commodities group needed someone to fill in the big enough shoes which may now belong to the world's largest, and very much still under the radar, physical commodities trader. It picked Magid Shenouda, who was co-head of commodities for Goldman until the end of last year.





As a reminder, Mercuria is firmly in bed with Goldman, having previously hired former Goldman executives Shameek Konar and Victoria Attwood Scott to be heads of investment and compliance respectively. The firm's co-founder, Marco Dunand, himself worked for several years for Goldman. So it should be no surprise that the private firm, whose funding may well include Goldman money, is rapidly becoming a Goldman and JPM commodities trading desk, but as far from the "vigilant" eye of the SEC and the regulatory efforts of the Fed as possible: Switzerland.

WSJ reports:

Magid Shenouda, who retired from Goldman Sachs toward the end of last year, will run Mercuria's trading business, joining the company's two Swiss founders, Marco Dunand and Daniel Jaeggi on the management team. Mr. Shenouda will take over management of the company's trading operations from Mr. Jaeggi, giving the Swiss trader more time to focus on client relationships and the integration of J.P. Morgan's commodities business once the sale closes later this year, the person said. "It makes sense to have another person…the size of the company has reached a level that it's tough to run with the current management," said a person familiar with the situation. Mr. Shenouda spent 14 years at Goldman Sachs running the bank's European crude oil and oil products and gas and power trading desks before becoming global co-head of its commodities trading business. Independent commodities merchants—an elite group of mostly privately held companies that specialize in trading everything from copper to cocoa—have grown rapidly over the past 10 years and are increasingly tapping big banks for executive talent as they seek to bolster their management teams.

Mercuria isn't the only commodities merchant to take advantage of Goldman talent:

Hong Kong-based trader Noble Group appointed former co-head of Goldman Sachs' operations in Asia, Yusuf Alireza, as its chief executive officer in 2012. Agricultural trading giant Louis Dreyfus Commodities is on the hunt for a new CEO from outside the company.

Just how big is little discussed Mercuria about to become? "With the acquisition of JPM's business we will substantially grow in size and are looking at a turnover of $130-$150 billion," reports Reuters.

So to summarize: any hopes that physical commodities manipulation would end with the liquidation of TBTF commodity trading groups in the US can be promptly dashed. Instead, "fair and efficient" trading of these assets will be conducted by the same people who traded them for the past decade, only not at their legacy firms such as Goldman and JPM, but instead in the peace and quiet, and regulator-free environment, of Switzerland where anything goes.