NEW YORK/LONDON (Reuters) – Wall Street’s commodity trading giants are using a 14-year-old law to hold on to their oil storage terminals and metals warehouses a little bit longer, even as the Federal Reserve considers cracking down on such investments.
Under the so-called “merchant” authority, U.S. financial holding companies are allowed to invest their own capital in just about any type of business – so long as they do so at arm’s length, for purely passive financial purposes, and for no more than 10 years. Banks have been allowed to take small equity stakes for decades, but a controversial 1999 banking law vastly expanded the scope of such investments.
LONDON (Reuters) – Commodity merchant Gunvor, long known in the industry as one of the key traders of Russian oil, is studying growing opportunities in North America resulting from the shale oil boom and is looking at select trading assets including parts of JPMorgan Chase & Co.’s (JPM.N: Quote, Profile, Research, Stock Buzz) business.
Speaking at the Reuters Global Commodities Summit on Tuesday, Gunvor chief executive and co-founder Torbjorn Tornqvist said the firm saw opportunities in North America and had been in contact with the Wall Street bank, which put its physical trading business up for sale this summer for around $3.3 billion.
LONDON, Oct 30 (Reuters) – Brent crude held firm near $109 a
barrel on Wednesday as a bigger-than-expected increase in oil
inventories in the United States was overshadowed by export
disruptions in Libya.
Traders were looking ahead to comments from a U.S. Federal
Reserve policy meeting that ends later in the day, but any
impact on oil prices may be muted. The U.S. central bank widely
expected to maintain its massive economic stimulus programme.
WASHINGTON/LONDON, Oct 28 (Reuters) – 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.
LONDON (Reuters) – Morgan Stanley’s commodity revenues were up modestly in the third quarter, the bank said on Friday, extending a mild recovery, as the company awaits a decision from the Federal Reserve on the future of its physical trading business.
Speaking on the bank’s third-quarter earnings call, Chief Financial Officer Ruth Porat said that a recovery in client activity had bolstered commodities for the second straight quarter, following a 77 percent collapse in revenue year-on-year in the first three months of 2013.
NEW YORK (Reuters) – In May 2010, one of Wall Street’s biggest banks went to the Federal Reserve with a seemingly straightforward request: permission to expand its physical commodity operations through specialized power contracts.
The regulator had already given rivals the go-ahead for such “tolling” arrangements that allowed long-term business deals with electricity plants, and now Bank of America-Merrill Lynch (BoA-ML) wanted similar treatment as it aimed at becoming a top-three bank in the natural resources supply chain.
NEW YORK, Oct 15 (Reuters) – In May 2010, one of Wall Street’s biggest banks went to the
Federal Reserve with a seemingly straightforward request: permission to expand its physical
commodity operations through specialized power contracts.
The regulator had already given rivals the go-ahead for such “tolling” arrangements that
allowed long-term business deals with electricity plants, and now Bank of America-Merrill Lynch
(BoA-ML) wanted similar treatment as it aimed at becoming a top-three bank in the
natural resources supply chain.
NEW YORK, Sept 27 (Reuters) – Oil fell on Friday as tensions
eased between the United States and Iran, culminating in the
first phone call between the two countries’ presidents since
1979 and a pledge to work swiftly toward an agreement on Iran’s
U.S. President Barack Obama said there was a “unique
opportunity” to make progress on longstanding tension around
Iran’s nuclear program, which has led to western sanctions
against the country that have curtailed its oil exports.
NEW YORK (Reuters) – The future of Goldman Sachs’ and Morgan Stanley’s commodity businesses faces even greater uncertainty after a key deadline for them to conform their physical trading to U.S. regulations expired at the weekend without word from the Federal Reserve.
The Fed’s silence leaves the two banks even more unsure about whether they will be able to continue owning and operating physical commodity trading assets, from power plants to metal warehouses, and the banks questioning whether the long-running issue has now been swept into a broader Fed review of the role of Wall Street in physical markets.
NEW YORK (Reuters) – Wall Street launched its first concerted defense of its role in physical commodity markets on Thursday, funding a report that highlighted the risks of banks being pushed out of the sector by political and regulatory pressure, and gaining support from an influential trade group.
The report commissioned by Wall Street’s largest lobby group, the Securities Industry and Financial Markets Association (SIFMA), said banks play a small but vital role in the natural resources supply chain. Their ability to trade in the underlying commodities – not just financial derivatives – helped markets function.