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Rating:Manufacturers Accuse J.P. Morgan of Wreaking ETF Havoc Not Rated 5.0 Email Routing List Email & Route  Print Print
Thursday, May 24, 2012

Manufacturers Accuse J.P. Morgan of Wreaking ETF Havoc

News summary by MFWire's editors

U.S. manufacturers are attacking a J.P. Morgan [profile] ETF before it's even launched.

A group of U.S. industrial users of copper wrote to the SEC that the New York City-based asset manager's planned copper-linked ETF will "grossly and artificially inflate prices" and "wreak havoc on the US and global economy", writes Jack Farchy for the Financial Times.

According to the report, the regulatory filing by J.P. Morgan suggests that its proposed ETF could hold 27 percent of copper in the London Metal Exchange's network, or 61,800 tons, compared to BlackRock's proposed iShares ETF which could only hold 121,200 tons.

A similar report by Bloomberg Businessweek, based on the letter by Vanderberg & Feliu, a New York-based law firm, lays out the argument that the funds linked to copper may create shortages and drive up prices because it would leave less of this metal available for manufacturers.

In a letter dated May 9 and quoted by Bloomberg Businesweek, the group said:

“JPM’s offering will therefore result in a substantial artificially-induced rise in near-term copper prices on the London Metal Exchange, which will severely disrupt the world market for the trading of such copper."

The FT report said that those complaining about J.P. Morgan's ETF include Southwire, the biggest US manufacture of electrical cable, and Red Kite, a metals-focused hedge fund and trader. 

Edited by: HFD

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