COLUMN-Goldman, Morgan Stanley shrink commodity books: John Kemp

-- John Kemp is a Reuters columnist. The views expressed are his own --

By John Kemp

LONDON, Nov 16 (Reuters) - Both Goldman Sachs (GS.N) and Morgan Stanley (MS.N) reduced the size of their commodity trading books during the third quarter, according to their latest filings on Form Y-9C ("Consolidated Financial Statements for Bank Holding Companies"):

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While the gross fair value of physical commodity inventories held on their balance sheets rose -- sharply in Goldman's case -- the gross fair value of the commodity contracts was down.

Most of the shrinkage came from smaller positions in exchange-traded futures contracts, as well as a reduction in over-the-counter (OTC) options. OTC swap positions also fell. But the gross notional value of forwards was little changed.