Responding to NYSE Arca’s request to list new physically-backed copper ETF created by JPMorgan, Carl Levin (D-MI) urged the SEC to deny the request, arguing the new ETF “would allow speculators to create a squeeze on the market,” and “…undoubtedly affect and increase the price of copper.”
Similar products in precious metals have been successful in recent years, according to the Financial Times. Unlike gold, silver and palladium, though, copper is essential to manufacturing because of its use in electrical wiring.
Not surprisingly, then, several US copper users, including Southwire, Encore Wire, Luvata and AmRod as well as trading house Red Kite, have argued that the new ETF would “wreak havoc” on the global economy.
NYSE, however, does not believe the JPMorgan ETF, which would start trading with 10,185 tonnes–with a capacity to hold up to 61,800 tonnes–would be significant compared to an annual coppper production of 20m tonnes.
“Given the anticipated size of the Trust relative to the size and depth of the physical copper markets… the Sponsor [JPMorgan] has informed the Exchange [NYSE] that it does not expect the Trust to cause a spike in copper prices,” NYSE said.
“The SEC will decide by Thursday whether to permit or reject the product, or to open a further period of consultation and market review.”
“NYSE has filed a separate request to list the BlackRock iShares copper ETF,” which could hold up to 121,200 tonnes.
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