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Fed reconsiders letting banks trade commodities
Fed Rethinks Move Allowing Banks to Trade Physical Commodities
By David Sheppard and Josephine Mason
Reuters
Friday, July 19, 2013
http://www.reuters.com/article/2013/07/19/federalreserve-commodities-ban...
The U.S. Federal Reserve is "reviewing" a landmark 2003 decision that first allowed regulated banks to trade in physical commodity markets, it said on Friday, a move that may send new shockwaves through Wall Street.
While it is well known that the Fed is considering whether or not to allow banks including Morgan Stanley and JPMorgan to continue owning trading assets like oil storage tanks or metals warehouses, Friday's one-sentence statement suggests that it is also reconsidering the full scope of banks' activities in physical markets, which help generate billions in profits.
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"The Federal Reserve regularly monitors the commodity activities of supervised firms and is reviewing the 2003 determination that certain commodity activities are complementary to financial activities and thus permissible for bank holding companies," the Federal Reserve said in an emailed statement. A spokesperson declined to elaborate or provide any details on the scale or timing of the review.
... For the full story:
http://www.reuters.com/article/2013/07/19/federalreserve-commodities-ban...
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Fed Reexamines 2003 Approval of Banks' Commodities Trading
By Bob Ivry and David Scheer
Bloomberg News
Friday, July 19, 2013
The Federal Reserve, facing lawmakers' criticism of Wall Street's trading in physical commodities, said it is reexamining a decade-old policy governing the firms' activities.
The Fed "regularly monitors the commodity activities of supervised firms and is reviewing the 2003 determination that certain commodity activities are complementary to financial activities and thus permissible for bank holding companies," Barbara Hagenbaugh, a spokeswoman for the central bank, said today in a statement. She declined to elaborate.
U.S. senators will hold a hearing next week as lawmakers explore whether financial firms such as Goldman Sachs Group Inc. and Morgan Stanley should continue to be allowed to store metal, operate mines, broker electricity and ship oil. Lawmakers have expressed concern that banks' involvement in both the supply of materials and related financial products, such as derivatives, may lead to manipulation.
... For the full story:
http://www.bloomberg.com/news/2013-07-20/fed-reviewing-2003-decision-on-...
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