JP Morgan To Exit Physical Commodity Business

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JP Morgan Chase & Co is exiting physical commodities trading, the bank said in a surprise statement on Friday, as Wall Street's role in the trading of oil tankers, coffee beans and metals comes under intense political and regulatory pressure.

Wall Street's biggest bank said an "internal review" had concluded it should pursue "strategic alternatives" for its physical commodities operations, which includes assets like its Henry Bath metals warehousing subsidiary and a team of physical power and oil traders in Houston and New York.

The firm will explore "a sale, spinoff or strategic partnership" for its physical arm, the statement said, adding the bank remained "fully committed" to its traditional financial commodity business, including trading derivatives and its activities in precious metals.

The bank's announcement follows a week of unprecedented scrutiny of Wall Street's commodity operations, after the U.S. Federal Reserve said last Friday it was reviewing a landmark 2003 decision that allowed commercial banks to trade in physical markets to "complement" their financial activity.

JPMorgan has also faced additional pressure from a power market manipulation scandal in California and the Midwest, with reports suggesting the bank will soon pay a near record $410 million settlement with the U.S. Federal Energy Regulatory Commission (FERC).

The Department of Justice and the U.S. Commodity Futures Trading Commission have also both launched probes into the metal warehousing businesses owned by Wall Street banks and other large physical traders, which have been accused of driving up metals prices.
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Reuters
 
I enjoyed this quote:

"fully committed to traditional banking activities"

...including but not limited to drug money laundering, tax evasion services, document forging, government bribing, and accounting fraud.
Click to expand...

Followed by:

..arson, cheesepoping, chiselling, pork-barreling, aggravated pimping, money whoring....

...child-trafficking, false-flagging, premature demolitioning, bubble inflating, ass kissing....

...election fixing, politician buying, insider trading, general douschebaggery, money printing....
Click to expand...

:)
 
one could successfully srgue they were never actually in the PHYSICAL commodity business in the first place... aside for screwing up the markets that is...
 
Doesn't JP Morgan buy(sell) bullion because it has customers that want to sell(buy) bullion?
As far as I know, a bullion bank and a swap dealer doesn't force its customers like a government does.
The next question then is, without a bullion bank or a swap dealer, will those customers cease to buy & sell bullion? Will the short term buying/selling then stop?
If not, then with or without JP Morgan, what's the difference?
 
bron suchecki said:
This has nothing to do with PMs, JPM is staying in the PM business and running of vaults.
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QLDSILVER provided a 'full Zerohedge link':
http://www.zerohedge.com/news/2013-07-26/jpmorgan-exit-physical-commodity-business
Articles title:
JPMorgan To Exit Physical Commodity Business
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saying:
We can only assume that "physical commodities" include the company's extensive inventories of tungsten (as well as the vault housing it), and not so extensive stores of gold and silver.
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Which is then a contradiction with the Reuters article they quote themselves.
That's like:
<Reuters> They didn't shoot the yellow duck.
<Zerohedge> We can only assume they shot the yellow duck too.
 
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