By Josephine Mason, Reuters
regulators have finally approved JPMorgan Chase & Co's
controversial plan to launch a copper exchange-traded fund backed by
actual stockpiles of the metal, dealing a blow to end users who fear the
product will wreak havoc on prices.
The U.S. Securities and
Exchange Commission ruling ends a two-year effort by the U.S. bank to
win regulatory support for its fund, which would effectively allow U.S.
retail investors to trade physical copper easily for the first time.
is also a defeat for consumers of the metal, which is used in plumbing
and cooling systems. Since the fund will use physical copper cathode as
collateral against shares of the fund, effectively removing a chunk of
metal from the market, users fear it will affect supplies and inflate
U.S. Senator Carl Levin, a
Democrat from Michigan, also voiced his opposition to the plan. In July,
Levin said the funds would cause a boom-and-bust cycle in the copper
Giving its backing for the
product, the commission said it did not believe the fund would disrupt
the flow of copper for immediate delivery.
Commission does not believe that the listing and trading of the shares
is likely to disrupt the supply of copper available for immediate
delivery, which is what (the copper fabricators) predict would increase
the price of copper," it said in its ruling dated Friday and posted on
its website on Monday.
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