From the June 01, 2010 issue of Futures Magazine • Subscribe!

Kapp and trading the carbon markets

For as long as he can remember, Bob Kapp has loved games of strategy and probability.

“Cards, chess, you name it,” he says. “Anything that makes you think strategically.”

A Virginian by birth, he’s lived in London for more than a decade and is now the senior carbon trader at Macquarie Bank, a career that began while studying government and economics at the College of William and Mary in the early 1990s.

“They had just started offering a new major called public policy, which combined my two areas of study,” he says. “That’s where my aspirations lay; I was even a page in the state Senate.”

But an internship at a local stock brokerage piqued his interest in markets, and he started trading currencies with just $2,000 in risk capital. “I found myself drawn to the battle of wits,” he says. “Trading gives you a chance to analyze and to think, but also to put your money where your mouth is.”

And he learned fast. “It’s hard to pay the bills in this business if you don’t know what you’re doing,” he laughs.

The real learning, however, began a year later, when a friend he had met through trading helped him land a job with options market maker Zahr Trading on the floor of the New York Mercantile Exchange (Nymex).

“I was a clerk and got yelled at and all that good stuff, but I also got to learn a bit about energy and a bit about options,” he says.

After a year and a half in the pits, he accepted an offer to set up the natural options book for Equitable Resources, which eventually got bought up by American Electric Power (AEP). They told him he could either stay in natural gas and move to Ohio or stay in Texas and trade west coast electricity.

He chose to learn the electricity markets, and in 1999 heard AEP was opening an operation in London.

“It was before the craziness in the U.S. power markets, and was a good time to come over here,” he says. “I made it quite clear that I was interested in the London job.”

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