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Wednesday, Sep 11
Fed seen limiting banks' commodities operations
- The Federal Reserve is expected to soon publish guidelines, possibly this month, that would restrict banks' involvement in physical-commodities businesses as part of an attempt to limit the firms' risky activities.
- The new rules could accelerate the withdrawal of JPMorgan (JPM), Morgan Stanley (MS) and Goldman Sachs (GS) from sectors such as metals warehousing, oil shipping and power generation.
- Fed deliberations on the matter come as GS and JPM face scrutiny over allegations that they intentionally drove up prices in aluminum and electricity markets respectively. The latter has already said it will exit the physical business and sell its trading operations, but GS believes it should be allowed to trade.