* SEC says ETF would not lead to metal shortage
* Regulator upholds decision to approve JPM fund
By Josephine Mason
NEW YORK, March 26 The U.S. Securities and
Exchange Commission has again rebuffed claims by copper
fabricators that JPMorgan Chase & Co's planned exchange
traded fund backed by physical copper would tighten supplies of
metal used in plumbing and wiring.
In a filing dated March 28 and posted on the SEC website on
Friday, the regulator upheld its Dec. 14 decision to approve the
controversial fund, rejecting concerns among copper users that
the fund would distort supply and inflate prices.
Industrial users fear the funds would cut off supplies of
copper, used in wiring and plumbing, and boost prices since they
will use physical copper cathode as collateral against shares of
the fund, effectively removing a chunk of metal from the market.
There is no new evidence to suggest that the JPM XF Physical
Copper Trust would lead to a scarcity of particular grades or
brands of copper, the SEC said.
"The commission does not believe that ... as a result of the
trust, it is much more likely that brand-sensitive end-users of
copper will not be able to obtain their desired brands of copper
at their desired locations," the filing said.
The latest missive came after a last-ditch effort by a
consortium of copper users to get the SEC to reverse its
decision. Their attorney Robert Bernstein with law firm Eaton &
Van Winkle LLP asked the regulator in a letter dated Jan. 9 to
block the fund.
Last month, two firms from the group, Southwire Co and
Encore Wire Corp, said they were preparing to fight the
ruling in the U.S. Court of Appeals.
The consortium, which represents half the annual copper
demand of the United States, has also opposed another, similar
fund, the iShares Copper Trust, planned by BlackRock Inc
. The SEC gave its seal of approval for that product last
This week's filing also rejected concerns raised in the
January letter that long lines in some warehouses would delay
investors getting their metal if they redeemed their shares in
the trust for physical material.
The SEC said it expected that metal would be transferred to
the relevant investor's account within three days of redemption,
which it did not consider to be a "significant" delay.
It remained unclear when JPM may launch the fund after two
years of work to get the approval in December.
JPMorgan and BlackRock have said fears about rising prices
and supply squeezes are unfounded because the funds would be
miniscule compared with the 20-million-tonne global market.