NEW YORK The U.S.
Securities and Exchange Commissions approval of JPMorgan
Chase & Co.s physical copper exchange-traded fund
(ETF) is "misguided" and will cause higher copper prices and
volatility, according to one elected official.
Sen. Carl Levin (D., Mich.), who
wrote to the SEC in July to express his opposition to copper
ETFs, said the impact on domestic business will be
"The SECs approval of the
copper ETF ... continues its misguided foray into commodities
markets," he said. "Approval of this commodity-based security
is a blow to American businesses and consumers that rely on
copper for industrial machinery, plumbing, transportation,
electric power generation and transmission, and
ETFs will be used to speculate
in copper, Levin said. This will, in turn, "increase copper
prices and volatility, and undermine market efforts to produce
prices in response to supply and demand by copper users, not
the supply and demand of speculators," he said. "I hope
Congress will review this action and act to prevent excessive
commodity speculation caused commodity-based ETFs."
The SEC is also considering a
proposal by New York-based BlackRock Inc. to launch a
physically-backed copper ETF, with a decision expected
Some key copper consumers are
also opposed to copper ETFs.
Southwire Co., Carrollton, Ga.; Encore Wire Corp., McKinney,
Texas; London-based Luvata UK Ltd.; and AmRod Corp., Newark,
N.J., along with metals-focused hedge fund RK Capital
Management LLC, Londonhired a lawyer to lobby against the
ETFs. The four copper companies represent about 50 percent of
the copper fabricating industry in the United States.