NEW YORK The U.S.
Securities and Exchange Commission (SEC) has given asset
manager BlackRock Inc. the go-ahead to list and trade shares in
a physical copper exchange-traded fund (ETF).
The trading and markets division
of the SEC said it will allow the New York Stock Exchange
(NYSE) to amend its rules so the proposed ETF can list and
trade on the exchange.
The move follows the SECs
approval of JPMorgan Chase & Co.s copper ETF in
December, a decision that is being contested in the U.S. Court
of Appeals by two large copper consumers, Southwire Co. and
Encore Wire Corp. (
amm.com, Feb. 13).
The initial size of the ETF is
121,200 tonnes, but New York-based BlackRock has said that if
the product is a success it could apply to increase its size
within three years.
The SEC said it proposed the
rule change "on an accelerated basis," having received a couple
of amendments from the NYSE related to the surveillance and
disclosure of the ETF.
Approval wasnt certain;
the SECs trading and markets division had been scheduled
to rule on the BlackRock application last year but said it
needed more time to consider objections and supporting data for
BlackRock has described the
proposed ETF as a relatively liquid, low-cost and transparent
means to transact in physical copper. It has refuted the
suggestion that the product would remove copper from the market
and distort prices, estimating that as of last July the total
world warrantable copper supply totaled nearly 2.93 million
tonnes, of which 1.36 million tonnes of liquid warrantable
copper stocks were available.
It also said it expects 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."
Copper ETFs have been fiercely
opposed by consumers, who believe they will distort prices and
create artificial market tightness.
Sen. Carl Levin (D., Mich.) said
that ETFs will be used to speculate in copper (
amm.com, Dec. 20). He described the SECs
approval of the JPMorgan ETF as "a blow to American businesses
and consumers that rely on copper for industrial machinery,
plumbing, transportation, electric power generation and
transmission, and electronics."