The US Securities and Exchange Commission delays BlackRock Copper ruling for two months

Posted by Lynn Eisler January 8, 2013 0 Comment 344 views

The United States Securities and Exchange Commission (SEC) has postponed a much awaited ruling until next year in February. The securities regulation body was supposed to make a ruling on a case involving BlackRock Inc.  The company wants to set up a copper exchange traded fund (ETF) using physical copper metal as collateral. The plan was presented to the SEC earlier in the week and it has garnered much controversy since then. Some players in the copper mining and selling industry claim that the plan by BlackRock Inc. would lead to inflated prices and supply disruptions of the precious metal.

The ruling comes on the heels of a similar ruling by the exchange commission regarding a similar plan by JPMorgan Chase & Co. This ruling however was made in favor of JPMorgan where the company was granted permission to go ahead and implement the plan. In the ruling SEC said that it believed that the plan would not in any way cause disruptions to the supply of copper.

In BlackRocks ruling of postponement to February 22 next year, the SEC claimed that it needed more time to deliberate on the proposed plan and look into it with more detail. It seems as if the commission has finally taken into account fears of copper fabricators who believe that JPM’s and BlackRock’s plans will greatly and negatively affect the prices and supply of the metal in the United States.

These fears stem from the fact that BlackRock would remove 183,000 tonnes from the market supply chain and use it as collateral against shares in the fund. The end users are claiming that such an amount is too big and its removal will have a definite impact on the market in that, the prices will get inflated and supply will be disrupted. JPM’s plan may not have ignited such fears, but with BlackRocks plan of setting up a fund double the size of JPM’s investors decided that the plan was too risky to implement.

Earlier BlackRock seemed confident after the green light given to JPM a week ago. Now however, the ruling has stopped it in its tracks and the company will have to wait until the festivities are completely over to know SEC’s decision. If approved, the two plans will definitely have a widespread effect in the stock market.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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