SEC approves physical copper fund
The U.S. Securities and Exchange Commission (SEC) approved the first exchange-traded fund in the U.S. that would allow investors to buy copper, despite complaints from some manufacturers and merchants that such a fund would put too much of the metal in the hands of investors, making it more scarce.
The proposed JPM XF Physical Copper Trust would be backed initially by 61.8 Mt (68.1 million st) of actual metal. Currently available copper ETFs are backed by futures.
J.P. Morgan Chase & Co. said it plans to list the ETF on NYSE Arca, a division of NYSE Euronex. A date for the listing hasn’t been released. J.P. Morgan and NYSE Arca declined to comment, The Wall Street Journal reported.
The SEC approval was the final hurdle in a 26-month process for J.P. Morgan. The investment bank had amended its request at least five times to answer the SEC’s questions and address concerns by U.S. copper users.
Copper manufacturers and merchants wrote to the SEC to oppose the planned ETF, saying it would hurt the industry by locking up too much copper in investors’ hands. Copper users say a copper-linked product could disturb a delicately balanced market that has faced production shortfalls for three of the past four years.
“We think it’s a sad day for consumers of the metal,” said Bob Kickham, senior vice president of procurement at Luvata, a copper-parts maker that had lobbied the SEC to block the ETF.
Copper is widely used in electrical wiring and pipes.
In its approval filing, dated Dec. 14, the SEC said it didn’t believe the copper ETF was “likely to disrupt the supply of copper available for immediate delivery.”
