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Fed reviewing banks' physical commodities trading
July 19, 2013 / 9:25 PM / 4 years ago

Fed reviewing banks' physical commodities trading

NEW YORK (Reuters) - The Federal Reserve is “reviewing” a landmark 2003 decision that first allowed bank holding companies to trade in physical commodity markets, it said on Friday, a move that may send new shudders through Wall Street.

While it is well known that the Fed is considering whether or not to allow regulated banks like Morgan Stanley (MS.N) and JPMorgan (JPM.N) to own trading assets like storage tanks or warehouses, Friday’s one-sentence statement suggests that it is also reconsidering the full scope of all banks’ activities in physical commodity markets.

“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 a statement.

Reporting By David Sheppard

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