Yikes. This is hot off the wire on Tuesday:
RTRS-UK GOVT COMMITTEE SAYS IT BRINGS ACTIVITIES OF LARGE DEALERS ON LONDON METAL EXCHANGE TO ATTENTION OF OFFICE OF FAIR TRADING
RTRS-UK GOVT COMMITTEE SAYS 4 LARGE COMPANIES OWN LME-REGISTERED WAREHOUSES, CALLS THAT “RESTRICTVE”
RTRS-UK COMMITTEE NAMES JPMORGAN <JPM.N>, OWNER OF WAREHOUSER HENRY BATH, AS ONE OF THOSE 4 COMPANIES
RTRS-UK COMMITTEE SAYS WOULD BE CONCERNED IF OWNERSHIP OF WAREHOUSES BY DOMINANT DEALER ON LME WAS ANTICOMPETITIVE
RTRS-LME SAYS MINOR METALS TRADE ASSOC. ASSERTION TO UK PARLIAMENT ON METALS WAREHOUSING IS “UNJUSTIFIED AND COMPLETELY OUT OF CONTEXT”
And here are the full findings, via the UK Parliament’s Science and Technology Committee:
79. We heard that there were large companies dealing metals within the UK and an allegation was made by the MMTA that a company through a subsidiary may be behaving in an anti-competitive manner: on the London Metal Exchange there are four very large companies that own the very warehouses that people deliver metal into, J.P. Morgan is one of them.
They own a company called Henry Bath. They are, therefore, a ring-dealing member of the exchange and they also own the warehouse. That is restrictive. They were also reported, at one point, to have had 50% of the stock of the metal on the London Metal Exchange. 80.
We would be concerned if the ownership of metals storage warehouses by a dominant dealer on the London Metals Exchange were to be anti-competitive. We would also be concerned if a dealer who had the resources to own over 50% of stock on the London Metals Exchange impeded the correct functioning of the market.
81. We use this report to bring the alleged activities of large dealers on the London Metals Exchange to the attention of the Office of Fair Trading. We would be concerned if a dealer were undermining the effective functioning of the market and we look for assurance that the market is functioning satisfactorily.
For background on the story check out the related links below.
Please wait 10 months for your aluminium. Thank you – FT Alphaville
Welcome to ‘synthetic warehousing’ – FT Alphaville
China’s bonded-warehouse copper mystery – FT Alphaville
If we build it, they will come – FT Alphaville
Is ‘cash for commodity’ the biggest trade in town? – FT Alphaville
Why JP Morgan’s new copper ETF may have a scouse exposure – FT Alphaville
Some more standard deviations in commodities – FT Alphaville