SEC delays ruling on BlackRock copper ETF until February

Mon Dec 24, 2012 10:34am EST

* Regulator sets final deadline of Feb. 22 for ruling

* Delay comes a week after SEC gave green light to JPM

* Fabricators fear ETF would inflate prices, disrupt supply

Dec 24 (Reuters) - U.S. regulators have delayed by two months a ruling on BlackRock Inc's controversial plan to launch a copper exchange-traded fund backed by physical metal a week after giving the go-ahead to a similar product proposed by JPMorgan Chase & Co.

The U.S. Securities and Exchange Commission set a new and final deadline of Feb. 22 to rule on the fund. It said it needed more time to consider the issues surrounding the iShares Copper Trust, which along with JPM's fund has ignited fears among copper fabricators about their impact on prices and supplies.

The postponement comes just a week after the SEC gave the green light to JPM's fund, saying it did not believe it would disrupt the availability of metal.

That decision was seen as a benchmark for BlackRock's product. The SEC followed a similar path with JPM, waiting to rule until the final deadline in order to investigate claims by copper fabricators that by hoarding over 180,000 tonnes of copper off the market, the funds would inflate prices and tighten supplies.

The end users say the removal of up to 183,000 tonnes of copper, which would be used as collateral against shares in the funds, would have a "devastating" effect on the market.

BlackRock's proposed fund is double the size of JPMorgan's.

JPMorgan's fund would store LME brand-approved copper valued at up to $499,761,150 - equivalent to about 62,000 tonnes based on a copper price of $8,000 per tonne. BlackRock's iShares Copper Trust would use up to 121,200 tonnes of copper as guarantee against shares in its fund.