January 13, 2014 / 11:25 PM / 4 years ago

Fed set to push ahead on new commodity trade rules

NEW YORK/WASHINGTON, Jan 13 (Reuters) - The Federal Reserve is set to take its first formal step toward limiting major Wall Street banks’ role in physical commodities markets this week and issue a notice to seek public comment on the topic, sources familiar with the matter said on Monday.

The Fed will publish a so-called “advance notice of proposed rulemaking” on Tuesday, laying out the issues it is considering, one day before a second Senate banking committee hearing on the matter, the sources said.

It is not clear what measures the Fed may propose. The public is expected to have a set period of time -- typically 60 to 90 days -- in which to submit comment letters.

Over the past year, lawmakers have pressed the Fed to examine whether Wall Street’s biggest banks, including JPMorgan Chase & Co and Goldman Sachs, should be allowed to own assets such as metals warehouses and oil tankers, and to trade physical commodities alongside commodity derivatives.

At a Senate hearing in July, witnesses testified that the activities pose a risk to the financial system in the event of a catastrophic accident. Metals consumers complained that banks’ ownership of physical storage assets enabled them to inflate prices for commodities such as aluminum.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below