NEW YORK The U.S. Securities and Exchange Commission (SEC) has delayed its decision on whether to allow asset manager BlackRock Inc. to list and trade shares in a physical copper exchange-traded fund (ETF).
The SEC trading and markets division said it will decide by Feb. 22 whether to allow the New York Stock Exchange (NYSE) to amend its rules so the proposed ETF shares can list and trade on the exchange.
"The commission finds it appropriate to designate a longer period within which to issue an order approving or disapproving the proposed rule change so that it has sufficient time to consider the proposed rule change and the issues raised in the comment letters that have been admitted in response to the proposed rule change," the SEC said.
Copper ETFs have been fiercely opposed by copper consumers who believe the funds will distort prices and create an artificial market tightness.
Consumers were dealt a blow recently when the SEC said it would allow the NYSE to amend its rules to accommodate a physical copper ETF sponsored by JPMorgan & Chase Co. (amm.com, Dec. 17).
The opposition has been led largely by a consortium comprising consumers Southwire Co., Carrollton, Ga.; Encore Wire Corp., McKinney, Texas; London-based Luvata UK Ltd.; AmRod Corp., Newark, N.J.; and metals-focused hedge fund RK Capital Management LLC, London.
BlackRock has refuted the suggestion that the product would remove copper from the market and distort prices in todays well-supplied market, estimating that the global warrantable copper supply totaled nearly 2.93 million tonnes as of July. Of this, almost 1.36 million tonnes of liquid warrantable copper stocks are available, BlackRock said.
The initial size of the proposed ETF is 121,200 tonnes, but BlackRock has said if the product is a success it could apply to increase its size.
It also said it expects that much of the initial demand for ETF shares will not necessarily represent new incremental investment demand for copper, but "rather a reallocation of current investments in physical copper by professional copper market participants."