The UK is concerned about banks like JP Morgan that warehouse commodities

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:

MARKET DOMINANCE

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.[113] 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.

http://ftalphaville.ft.com/blog/201...erned-about-banks-that-warehouse-commodities/

 

How, exactly, do you define "manipulation"? :eek:

 

Here we go......with the ''He said, She said'' word games.

 

I have a solution - make them play rock, paper, scissors

 

Just raise the margin requirements to make the spec. money run away. Watch what happens to the price. If someone has the cash up front to purchase the underlying commoditie(s) let them it usually ends up badly. Many have tried to corner a market and went bust.

Akuma