An independent commodity derivatives trading business wanted to find a way to capture a meaningful proportion of its total brokerage spend with its leading brokers, in order to improve its trading margins.
The opportunity was material. By identifying the opportunity and designing and negotiating a novel volume-based rebate scheme across its key brokerage relationships, the business could convert existing trading volume into direct bottom-line value worth up to $3m per annum.
This type of scheme did not exist in any capacity across the industry. The opportunity had to be identified, the scheme designed, framed, sold and negotiated from scratch with five of the leading oil derivatives brokers in the market.
Each broker had different commercial interests, internal pressures, competitive concerns, personalities and ambitions. Each needed to be moved towards the scheme in a different way.
The risk was that the scheme could be rejected, watered down, or negotiated broker by broker in a way that weakened the overall result.
BreakPoint Black provided commercial representation, engaging directly with the heads of each brokerage firm and leading the negotiation strategy from design through to execution.
The work began with one-to-one intelligence gathering: understanding each firm’s interests, pressures, personalities, aspirations and likely response patterns.
From there, we designed the proposal architecture, leverage strategy and move plan across all five negotiations, including navigating live M&A activity between two of the target firms. The scheme had to feel commercially valuable, competitively important and strategically worth securing for each counterparty.
The behavioural strategy was tailored to each individual. The financial logic mattered, but so did how the opportunity was framed, how each person was approached and how perceived dependency on the scheme was created.
All five leading brokerage firms signed up to the scheme.
Based on the existing trading volumes, the negotiated structure was capable of delivering up to $3m per annum directly to the client’s bottom line.
No additional customer volume was required. The value was unlocked by restructuring existing broker relationships and converting current trading activity into negotiated economic return.
For PE and operating-partner audiences, this is the cleanest form of commercial value creation: unchanged business activity, enhanced commercial architecture, material bottom-line gain.