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Commodities Briefing - Category | Regulatory more

Regulator bars founder from India’s largest commodities exchange

Posted on 19 December 2013 by VRS  |  Email |Print

In a blow to the founder of India’s largest commodity exchange, the country’s market regulator on Tuesday barred Financial Technologies India Ltd. from running Multi Commodity Exchange of India Ltd in the wake of alleged trading irregularities at another exchange.
Forward Markets Commission ordered Financial Technologies to pare down its stake to 2% from 26% in the exchange, saying there was evidence of misconduct at its subsidiary company National Spot Exchange Ltd………………………………………..Full Article: Source

Gold measures could soon be eased in India - Analysts

Posted on 17 December 2013 by VRS  |  Email |Print

Good news is in the offing in India with the government deliberating a review of the duty structure and the restrictive measures to import gold. With the country’s current account deficit shrinking to $5.2 billion, India’s tough measures on gold are set to ease, according to reports.
“India’s CAD is just 1.2% of gross domestic product for the quarter ended September 2013, as compared to the deficit of $21.8 billion for the quarter ended June 2013 - nearly 76% down. The reduction in CAD is attributed to curbs on gold imports coupled with a smart recovery in exports following the depreciation of the rupee,” said Manish Kedia, bullion retailer………………………………………..Full Article: Source

Volcker Rule effect: Gold, Silver fundamentals to matter more

Posted on 13 December 2013 by VRS  |  Email |Print

The Volcker Rule, a provision of the 2010 Dodd-Frank Act that prohibits banks from ‘proprietary trading’ will have far reaching impact on gold and silver futures, according to Jeff Nichols, renowned precious metals economist and Managing Director of American Precious Metals Advisors.
The new rule goes into effect from April 1, 2014 and full compiance will be effective from July 21, 2015. According to Jeff Nichols, the Volcker Rule would mean large US banks such as Goldman Sachs and JP Morgan will be prohibited from trading gold and silver, including forward, futures and options-except on behalf of customers and not for their own short-term speculative gains………………………………………..Full Article: Source

Deutsche Bank quits commodities under regulatory pressure

Posted on 06 December 2013 by VRS  |  Email |Print

Deutsche Bank AG pulled the plug on its global commodities trading business on Thursday, cutting 200 jobs as it becomes the first major bank to exit the once lucrative sector due to toughening regulations and diminished profits.
Germany’s largest bank, which was one of the top-five financial players in commodities, said in a statement it will cease trading in energy, agriculture, base metals, coal and iron ore, retaining only precious metals and a limited number of financial derivatives traders………………………………………..Full Article: Source

Regulators should focus more on ‘non-sophisticated’ hedge funds

Posted on 06 December 2013 by VRS  |  Email |Print

Market regulators should focus more on non-sophisticated hedge funds rather than concentrate on so-called sophisticated players, said Paul MacGregor, Managing Director of Product Strategy at FFastFill during the latest Opalesque 2013 Chicago Roundtable.
The Opalesque 2013 Chicago Roundtable was sponsored by FFastFill, Eurex and Taussig Capital. “Maybe we should tell the regulators to focus a little bit more then on the non-sophisticated large players in the marketplace as opposed to sophisticated players and high frequency guys, which they love to spend a lot of time focusing on,” McGregor said………………………………………..Full Article: Source

U.K., German regulators scrutinize gold silver pricing

Posted on 27 November 2013 by VRS  |  Email |Print

The price-setting processes for gold and silver in the spot market are the latest to come under review from global regulators, with authorities in Europe investigating the mechanisms for both precious metals.
In the U.K., the Financial Conduct Authority is reviewing how the gold price is set, said a person familiar with the investigation, who added that it is at an early stage. In Germany, the Federal Financial Supervisory Authority, or BaFin, is looking into the rate-setting processes for gold and silver, according to a representative at the regulator………………………………………..Full Article: Source

Could a Carbon Market Policy Committee save the carbon market?

Posted on 25 November 2013 by VRS  |  Email |Print

The creation of a Carbon Market Policy Committee (CMPC) modelled on the Bank of England’s Monetary Policy Committee (MPC) should form the centrepiece of upcoming reforms to the EU’s emissions trading scheme (ETS), providing a politically independent mechanism for setting the number of carbon allowances in the market in order to drive investment in low carbon infrastructure.
That is the recommendation of a major new report from the IPPR think tank, which argues that effective reforms by the EU would not only help drive low carbon investment in the most cost effective manner, but would also help reinforce the bloc’s position as a leading player in international climate talks………………………………………..Full Article: Source

Yellen says Fed looking at possible commodities, bank rules

Posted on 15 November 2013 by VRS  |  Email |Print

The Federal Reserve may issue new rules for Wall Street’s role in commodity markets once it winds up a review of banks’ raw materials trading, the prospective new head of the U.S. central bank told lawmakers.
The Fed said in July it was reviewing a decision to allow regulated banks to trade in physical commodities, leading to banks’ ownership of assets like oil storage tanks and power plants and accusations of price manipulation………………………………………..Full Article: Source

How does Fed policy affect commodity markets?

Posted on 15 November 2013 by VRS  |  Email |Print

Monetary policy surprises can have a big impact on commodity markets, but the exact nature of the price movement depends on the direction of the change in monetary policy and the raw material in question.
New research from the Federal Reserve Bank of Atlanta finds that when the central bank surprised markets with tighter policy between 1990 and 2008, gold and platinum prices rose the most. When policy went the other way–when the Fed surprised with growth-stimulating rate cuts–prices for crude and heating oil were the biggest beneficiaries………………………………………..Full Article: Source

Regulators urged to probe metals markets abuse

Posted on 11 November 2013 by VRS  |  Email |Print

Britain’s parliamentary financial watchdog has urged regulators to probe potential abuses in metals markets as deeply as they are investigating the ongoing scandals over foreign exchange and Libor benchmark interest rates.
Andrew Tyrie, chairman of the Treasury select committee, told the Financial Times that MPs were conscious of growing concerns that the manipulation of rates – already exposed in the Libor affair, and now under investigation in a mounting regulatory probe into potential forex abuses – may go well beyond those areas and into metals markets………………………………………..Full Article: Source

U.S. regulator revives plan to limit excessive commodity bets

Posted on 06 November 2013 by VRS  |  Email |Print

The U.S. derivatives regulator on Tuesday reintroduced a plan to curb commodity market speculation, reviving a crucial Wall Street reform after a judge knocked down an earlier version of its rules on position limits.
The Commodity Futures Trading Commission proposal will set caps on the number of contracts that a single trader can hold in energy, metal and agricultural markets, a measure aimed at capping speculation that some blamed for the spike in raw material and food prices prior to the 2008 financial crisis………………………………………..Full Article: Source

C.F.T.C. approves tighter commodity trading rules

Posted on 01 November 2013 by VRS  |  Email |Print

In October 2011, as the futures broker MF Global teetered on the brink of collapse, it dipped into client accounts in an effort to avert bankruptcy. But the action failed to save the broker, and its implosion left thousands of clients short a total of $1.6 billion.
Two years after MF Global’s bankruptcy, regulators have sought to restore confidence in the industry, tightening rules that force brokerage firms to better safeguard client money…………………….Full Article: Source

Three of seven commodity exchanges in ČR may lose licence

Posted on 01 November 2013 by VRS  |  Email |Print

Three out of the seven active commodity exchanges in the Czech Republic are in danger of losing their licence and administrative proceedings due to breaches of law are under way with them, daily E15 writes Wednesday.
Two of them are exchanges trading in energies so that only one exchange enabling electricity and gas purchases for final consumption would be left. The Industry and Trade Ministry leads proceedings against the Commodity Exchange Profit due to some 20 breaches of the law on commodity exchanges…………………….Full Article: Source

Regulatory uncertainty over commodity units

Posted on 31 October 2013 by VRS  |  Email |Print

Bank ownership of commodity operations has generated lots of controversy recently. When the heat intensified, JPMorgan Chase wasted no time in announcing it would sell its physical commodity ownership business, to the surprise of no one. Goldman Sachs has not followed suit with regard to its Metro warehousing unit, but surely the issue has come up internally.
As for trading operations, the Federal Reserve has come under fire for a lack of bright lines in this area. However, it “may not unveil its plans for regulating Wall Street’s commodity trading business until early next year,” reports Reuters……………………………….Full Article: Source

New regulations may curb commodity business of Wall Street banks

Posted on 31 October 2013 by VRS  |  Email |Print

Several major banks involved in commodities business would find the going tough following the Federal Reserve move to regulate the bsuiness and impose new capital charges, according to news reports.
The Federal Reserve may review the permission granted to banking majors who engage in trading of physical commodities such as oil and metals and impose curbs on their operations. This has caused apprehensions among the banking community– Citigroup, Barclays, JPMorgan, Goldman Sachs being some of them……………………………….Full Article: Source

Chinese financial regulator warming up to commodity options

Posted on 31 October 2013 by VRS  |  Email |Print

China’s financial markets professionals have been facing an ongoing battle from policy makers as the government keeps a Chinese wall from much-needed reforms to compete with international markets. However, in a turn of events the financial watchdog, China Securities Regulatory Commission (CSRC), has hinted that it will be opening up commodity options trading.
In a notification on the regulator’s website, the firm stated that it will be allowing commodity options simulation trading to commence from November 8th. The move comes 12 months after the Dalian Commodity exchange has been exploring simulation trading in options, a common practice among venues prior to the launch of new products or solutions……………………………….Full Article: Source

Fed to outline bank commodity policy early 2014

Posted on 29 October 2013 by VRS  |  Email |Print

The U.S. Federal Reserve may not unveil its plans for regulating Wall Street’s commodity trading business until early next year, a person briefed on the matter said, deferring a decision on the politically fraught debate into 2014.
The timing confounds any expectations that the regulator would make its views known before a second Senate hearing expected next month into the rigging of aluminum and other markets, at which Fed officials are due to testify………………………………………..Full Article: Source

India: Investment in commodities: Regulated markets are a safe investment option

Posted on 29 October 2013 by VRS  |  Email |Print

For the world financial markets, an exposure in a regulated market has always been the safest investment choice. Though, currently, there are concerns about commodities in the Indian market, these can be addressed by taking a closer look at the scenario. A comparison of the regulated and unregulated marketplace will help us understand how risk can be avoided.
India has come a long way in the commodities space, turning into a stable and structured marketplace. With a well-established commodity futures platform and exchange, the scope of losses due to quality or physical deliveries is negated………………………………………..Full Article: Source

China securities watchdog says conditions ripe for commodity options

Posted on 28 October 2013 by VRS  |  Email |Print

Conditions are ripe for the launch of commodities options, China’s securities regulator said on Friday, a sign that it will soon approve some of the options contracts proposed by local futures exchanges.
China’s securities watchdog currently bars options trading, but all of China’s commodity exchanges, including the Dalian Commodities Exchange, the Zhengzhou Commodities Exchange and the Shanghai Futures Exchange, have lodged proposals to launch options on some of their contracts………………………………………..Full Article: Source

U.S. swaps regulator to vote on commodity limits rule

Posted on 24 October 2013 by VRS  |  Email |Print

The U.S. derivatives regulator will meet next month to adopt a rule that will curtail Wall Street’s ability to speculate with commodities, a measure investment banks are fighting in court. The Commodity Futures Trading Commission is revising the rule on so-called position limits, even as its lawyers are preparing to defend an earlier version knocked down by a U.S. court last year.
But Mark Wetjen, one of the CFTC’s four commissioners, said this week that the dual strategy of pursuing the appeal and a new rule at the same time was not necessarily the best, and that the agency could drop the appeal………………………………………..Full Article: Source

Fed weighs surcharge on banks’ physical commodity businesses

Posted on 17 October 2013 by VRS  |  Email |Print

Federal Reserve officials are considering imposing a new capital surcharge on Wall Street banks that own oil pipelines, metals warehouses and other lucrative physical-commodities assets, according to people familiar with the matter.
Such an approach could encourage banks to pare back their involvement in physical commodities, which has increasingly raised concerns among regulators and lawmakers………………………………………..Full Article: Source

JPMorgan to pay $100-mln to settle with commodities regulator on Whale trades

Posted on 17 October 2013 by VRS  |  Email |Print

JPMorgan Chase & Co agreed to pay $100-million and admit its traders acted recklessly to settle one more set of U.S. charges over its disastrous “London Whale” trade, the Commodity Futures Trading Commission announced on Wednesday.
Last month the bank paid $920-million to four other U.S. and British regulators to resolve civil probes of the bank’s $6.2-billion in derivative losses involving its chief investment office………………………………………..Full Article: Source

NSEL, FTIL entities barred from commodities auctions

Posted on 04 October 2013 by VRS  |  Email |Print

The Forward Markets Commission (FMC) on Thursday banned group entities and associate concerns of the National Spot Exchange Ltd (NSEL) and its parent Financial Technologies (India) Ltd (FTIL) from participating in auctions of commodities and assets.
Board members and employees of both the companies have also been barred from the auctions. The letter addressed to NSEL chief executive officer and managing director, Saji Cherian, referred to the recent auction of castor seeds and sugar conducted by the spot exchange………………………………………..Full Article: Source

Commodity benchmarks could be subject to tighter FCA rules

Posted on 03 October 2013 by VRS  |  Email |Print

Commodity benchmarks, such as those used for gold and oil, could be subject to tougher regulation in the wake of the Libor scandal. According to a report in the Financial Times key resource barometers could fall under the eye of the regulator.
At a conference in Rome FCA technical specialist Don Groves admitted he would not be surprised if the UK Government did take some form of action………………………………………..Full Article: Source

Fed said to review commodities at Goldman, Morgan Stanley

Posted on 02 October 2013 by VRS  |  Email |Print

The Federal Reserve has expanded its scrutiny of banks’ physical commodities operations to encompass businesses run by Goldman Sachs Group Inc. (GS) and Morgan Stanley (MS) that Congress had previously authorized.
The Fed is examining all legal and regulatory exemptions that allow banks to participate in the commodities markets, said a person briefed on the process who asked not to be named because the review is confidential. The appraisal, intended to minimize potential risks to the financial system, widened since the Fed said in July that it’s reconsidering its landmark 2003 decision to grant some lenders, such as Citigroup Inc. (C) and JPMorgan Chase & Co., permission to expand into raw materials………………………………………..Full Article: Source

Swiss to vote on ban for speculation in agricultural commods

Posted on 02 October 2013 by VRS  |  Email |Print

Switzerland is obliged to hold a vote on banning speculation in agricultural commodities after a left wing political initiative gained enough signatures to force it to under Swiss law.
The timing of the national vote is not clear and is pending official guidance from the government. Under the Swiss system, parliament can propose alternative legislation which is typically more moderate and also subject to a national vote………………………………………..Full Article: Source

More regulatory angst over physical commodities and banks

Posted on 30 September 2013 by VRS  |  Email |Print

Should Goldman Sachs stay in physical commodities? Once the controversy really got hot, JPMorgan wasted no time in announcing that it would exit the business of physically storing metals commodities. The issue is alive for other banks, notably Goldman Sachs, which has taken its lumps over its controversial Metro warehousing facility in Detroit.
Reuters notes that regulators have some big decisions to make. First, the Federal Reserve must decide whether former investment banks Goldman Sachs and Morgan Stanley will “be allowed to continue owning and operating physical assets like oil pipelines and metal warehouses.” ……………………………………….Full Article: Source

Fed tapering to hurt commodity markets: Nouriel Roubini

Posted on 27 September 2013 by VRS  |  Email |Print

There are a number of factors as to why the commodity super cycle is probably over. First of all, China is slowing down. Their growth rate might be as low as 6% or 7%. Additionally, we have a slow recovery in advanced economies and since there the monetary policy is going to be tightened, however, gradual.

The Fed eventually is going to start tapering, would eventually go away from zero policy rates and that increase in short and long rates is going to soften commodity prices as well. The dollar is going to strengthen over time because economic growth in the US is going to outperform the one in other advanced economies. The Fed is going to exit faster than other central banks………………………………………..Full Article: Source

Why Indians love it when government makes gold expensive

Posted on 26 September 2013 by VRS  |  Email |Print

Government of India makes gold more expensive by hiking duties four times in 20 months, hoping this will deter citizens of India from holding more gold. But not only does gold remain attractive for Indians, expectations of a high price regime have increased its attractiveness.
This is not a perverse outcome. It’s more a case of wrong official logic. Economics 101 says high prices dampen demand for a product or a service. But Investing 101 says expectations that an asset class will get pricier can increase demand for that asset. Gold is an asset class………………………………………..Full Article: Source

Silver price-manipulation probe closes

Posted on 26 September 2013 by VRS  |  Email |Print

U.S. commodity regulators closed a five-year-long investigation of silver-market manipulation claims without filing charges, the latest setback for authorities cracking down on alleged trading abuses.
The Commodities Futures Trading Commission said there is no “viable basis” for a case that had its roots in emails commissioners received from investors amid market volatility in 2008. The decision to close the case amounts to a victory for J.P. Morgan Chase, a large silver trader that was the subject of manipulation allegations………………………………………..Full Article: Source

India to strengthen corporate governance of commodity exchanges

Posted on 24 September 2013 by VRS  |  Email |Print

India’s commodity regulator has moved to strengthen corporate governance of commodity exchanges by issuing guidelines to restrict board representation by promoter members. Under the guidelines, a promoter of an exchange cannot have board representation higher than their total shareholding, capped at 26 percent at the end of the fifth year of operation, the Forwards Market Commission said.
These revised guidelines follow the National Spot Exchange Ltd (NSEL), MCX-SX’s affiliated commodity exchange, abruptly suspending trading in August. NSEL has since struggled to square off outstanding contracts worth over 55 billion rupees ($868.81 million)…………………………………..Full Article: Source

Commodities may benefit from QE second wind, but it isn’t a one-way street

Posted on 20 September 2013 by VRS  |  Email |Print

The US Federal Reserve has said it will continue with its monthly bond-buying programme (quantitative easing or QE), boosting investor sentiment worldwide because the liquidity tap remains open for now.
What does this mean for commodities, especially metals? Easy liquidity conditions had propped up commodity prices, even when economic conditions were turning weak. But the potential threat to liquidity, from a Fed taper, had resulted in commodity prices retreating after May. This was particularly visible in non-ferrous metal prices. But prices have recovered since August despite the threat of a tapering due to improving economic conditions in parts of the world………………………………………Full Article: Source

Fed tapering and commodities

Posted on 20 September 2013 by VRS  |  Email |Print

As the Fed considers announces the delay of QE tapering Edith Southammakosane, senior analyst at ETF Securities, explains what this means for commodities.
“The Fed’s decision to maintain its existing policy surprised the audience yesterday as the market expected tapering to start this month. Most asset classes immediately reacted positively to the announcement. The S&P 500 rallied nearly 1% while Eurostoxx 50 jumped 1.3%. Commodity prices also saw immediate gains, with the price of gold surging 3.8% and the price of copper gaining 1.2%………………………………………Full Article: Source

India: Govt may consider Sebi-like regulations for commodities market

Posted on 20 September 2013 by VRS  |  Email |Print

As a multi-agency probe continues into the Rs 5,600-crore payment crisis at National Spot Exchange Ltd (NSEL), the government may consider streamlining the norms for commodities and capital markets, regulated by FMC and Sebi, respectively, to plug potential regulatory gaps.
The idea is to make the regulations governing commodity derivatives markets much more stringent and bring them at par with the norms applicable for Sebi-regulated capital markets, sources said………………………………………Full Article: Source

India bans trading in non-farm commodities on Saturdays

Posted on 19 September 2013 by VRS  |  Email |Print

India’s commodity market regulator Wednesday asked the country’s six national-level commodity exchanges to stop futures trading in non-agriculture commodities on Saturdays, as it is the global practice.
Commodity exchanges in India currently allow trading on Saturdays for four hours, compared with seven hours for agriculture commodities and 14 hours for non-agriculture commodities during week days………………………………………..Full Article: Source

India bans trading in non-farm commodities on Saturdays

Posted on 19 September 2013 by VRS  |  Email |Print

India’s commodity market regulator Wednesday asked the country’s six national-level commodity exchanges to stop futures trading in non-agriculture commodities on Saturdays, as it is the global practice.
Commodity exchanges in India currently allow trading on Saturdays for four hours, compared with seven hours for agriculture commodities and 14 hours for non-agriculture commodities during week days………………………………………..Full Article: Source

Fed bond-buying pullback could undermine commodities

Posted on 18 September 2013 by VRS  |  Email |Print

If the Federal Reserve pulls back on its bond buying, the central bank’s actions could further undermine the case for investing commodities, which have been battered by excess supplies and souring sentiment.
The Dow Jones-UBS Commodity Futures Index has dropped 7.9% since the start of the year as investors have sought out stocks and other higher-yielding assets. This is in sharp contrast to 2009, when the index rose 19% partly on the Fed’s post-crisis stimulus efforts………………………………………..Full Article: Source

Fixing commodity trading: Amend and pass new regulatory framework

Posted on 18 September 2013 by VRS  |  Email |Print

The transfer of administrative control of the regulator for commodity trading, the Forward Markets Commission (FMC), from the consumer affairs ministry to the finance ministry seems a typical government response to a crisis like the one besetting the National Spot Exchange Ltd (NSEL).
But it is a sensible step that should have been taken much earlier, although it will not suffice to regulate exchange-based commodity trading - be it spot trading or forward trading. That requires a strong and autonomous regulator with sufficient expertise and infrastructure, as well as the authority to take expeditious action and effectively enforce its orders. The FMC currently lacks all these………………………………………..Full Article: Source

FMC widens risk management group to include Sebi, BSE members

Posted on 17 September 2013 by VRS  |  Email |Print

The Forward Markets Commission (FMC) today widened the Risk Management Group to include a member each from Sebi, BSE and IFFCO, among others, as it tackles the growing challenges of risks associated with commodity futures trading after the NSEL crisis.
The Risk Management Group (RMG) was set up in February 2005 to assist the FMC in formulating risk management policies and guidelines for the commodities derivatives market. The group was last reconstituted in March 2007………………………………………..Full Article: Source

U.S. swaps regulator seeks bank openness on commodities

Posted on 16 September 2013 by VRS  |  Email |Print

Regulators should have better insight into the commodity businesses owned by large Wall Street banks to help them prevent market manipulation, a senior official at the U.S. derivatives watchdog said.
The Federal Reserve is reviewing an exception that has allowed banks to trade physical commodities and even own metals warehouses and oil tankers despite a law that prohibits the mingling of finance and commerce. But Bart Chilton, a member of the Commodity Futures Trading Commission which regulates swaps and futures, said his agency did not even know exactly what the banks owned………………………………………..Full Article: Source

Banks face physical commodity curbs

Posted on 11 September 2013 by VRS  |  Email |Print

Wall Street is bracing for a ruling that may hasten the exit of J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley from businesses such as metals warehousing, oil shipping and power generation. Financial-industry executives expect the Federal Reserve to issue guidelines as soon as this month limiting bank participation in so-called physical-commodities businesses.
The decision would mark a significant step in the government’s effort to curtail risky activities on Wall Street, forcing large financial companies to dismantle franchises a decade or more in the making. The rules would apply to all U.S. banking companies………………………………………..Full Article: Source

EC poised to row back on commodities benchmarks

Posted on 09 September 2013 by VRS  |  Email |Print

The European Commission looks set to row back on a number of controversial proposals to regulate commodities benchmarks, contained within its wider benchmark reform, after an industry backlash arguing the new rules would make the market more opaque. The final text on benchmarks, which is due to be published on September 18, is no longer expected to contain an earlier proposal to hold contributors liable for their submissions to commodities benchmarks, according to two sources close to the talks.
Trading in commodities is largely over the counter and relies on submissions from traders to price-reporting agencies, such as Platts. Market participants have argued that if contributors could potentially be penalized for the submissions they make, fewer would do so, reducing transparency……………………………………….Full Article: Source

India: Bid to bring FMC under finance fold

Posted on 09 September 2013 by VRS  |  Email |Print

The government plans to bring the Forward Markets Commission (FMC) under the finance ministry and then consider making it an arm of market regulator Sebi, following the payment crisis at NSEL.
The government is also taking a close look at whether hawala, or illegal money, was used in trading at NSEL — a bourse which seemed to have taken bids far more than the underlying commodities and for longer time frames than allowed. The two groups appointed by the Centre to probe the crisis are expected to submit their reports next week………………………………………..Full Article: Source

Exchanges responsible for delivery: FMC

Posted on 03 September 2013 by VRS  |  Email |Print

FMC has also directed the exchanges to ensure that all the existing FMC accredited warehouses get registered by 31 Dec. Commodities markets regulator Forward Markets Commission (FMC) on Monday said commodity future exchanges are responsible for ensuring the settlement of outstanding forward contracts by way of delivery.
Forward Contract Regulation Act, 1952, requires all forward contracts to be delivery-based. Without mentioning any exchange, FMC said “it has been observed that some of the exchanges have issued circulars to their trading members and other market participants in which conscious efforts have been made to evade their prime responsibility of ensuring quality and quantity of commodities as per the prescribed contract specification, and to pass on the entire onus to the warehouse service providers, which is not correct”………………………………………..Full Article: Source

China to exempt some commodities imports from licence requirements

Posted on 29 August 2013 by VRS  |  Email |Print

China will do away with licence requirements for imports of some commodities, including refined copper, stainless steel and natural gas, from September 1 as part of broader moves to cut red tape and open up its commodities markets.
Products exempt from the import license requirement also include semi-finished copper products, scrap copper, scrap aluminium, steel, steel products and some agricultural products, according to a statement posted on the Ministry of Commerce website on Tuesday………………………………………..Full Article: Source

FMC tightens commodity exchange screws

Posted on 21 August 2013 by VRS  |  Email |Print

The crisis at the National Spot Exchange have brought things to a head, and the Forward Market Commission, which regulates commodity exchanges, is taking a hard line when it comes to compliance with its directives.
The commodities exchange regulator has been working on plugging regulatory gaps in these exchanges for a few months now. The hue-and-cry created by the NSEL crisis has only strengthened the FMC’s resolve to crack the whip to ensure that all 6 commodity exchanges in the country conform to its ‘fit & proper’ management guidelines………………………………………..Full Article: Source

Banks’ physical commodity trading comes under scrutiny

Posted on 21 August 2013 by VRS  |  Email |Print

Amid a review of a 2003 determination by the Federal Reserve, the involvement of US banks in physical commodities has come under fire from regulators, politicians and the media. Could they really be forced to exit physical trading?
During the last two weeks of July, many Wall Street executives were undoubtedly looking forward to a much-needed summer break. But instead, bank commodity chiefs found themselves engulfed in a maelstrom of criticism about their firms’ involvement in physical commodities………………………………………..Full Article: Source

Regulators examine aluminum warehousing

Posted on 13 August 2013 by VRS  |  Email |Print

Federal regulators have begun an investigation into whether some Wall Street banks artificially inflated the cost of aluminum and other metals at the expense of end users and consumers, according to people familiar with the matter.
Commodity Futures Trading Commission enforcement officials sent subpoenas last week to firms responsible for storing and delivering aluminum, including Goldman Sachs Group Inc. and J.P. Morgan Chase & Co., seeking documents related to their commodities operations as far back as January 2010, the people said………………………………………..Full Article: Source

Regulators to test commodities bankers’ mettle

Posted on 12 August 2013 by VRS  |  Email |Print

The growing involvement of banks in commodities markets is finally being placed under the microscope. Next month the US Federal Reserve is expected to report on whether it will allow US banks to continue with their current involvement in the commodity markets. Its action could well prompt governments around the world to follow the lead.
Metals, energy and soft commodities are all now heavily influenced by the activities of banks: whether it is financing, physical trading, warehousing or derivatives. Most of these areas are unregulated and opaque and thus render the banks open to allegations of conflicts of interest and abuse………………………………………..Full Article: Source

Why are JPMorgan and Goldman being accused of price manipulation?

Posted on 08 August 2013 by VRS  |  Email |Print

Regulators have had the financial industry under a microscope since the late-2000s crisis, and every time they turn over a stone they seem to find something to litigate or regulate. Most recently, mega-banks like Goldman Sachs and JP Morgan have come under fire for allegedly shady business practices regarding their ownership of commodities storage facilities.
The New York Times called attention to some suspicious behavior from Goldman Sachs in July. The bank was accused of using a fleet of trucks to move 1,500-pound bars of aluminum between warehouses, thereby lengthening the storage time of the commodity and increasing the prices paid by manufacturers and consumers across the country, thus adding millions of dollars per year to the company’s coffers………………………………………..Full Article: Source

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