Fed moves to rein in US banks’ physical commodity trading

US Federal Reserve in Washington, DC

In a long-awaited move, the US Federal Reserve Board has initiated a process that could lead to stricter regulations on the ability of Wall Street banks to trade physical commodities. On January 14, the Fed released a document discussing the risks associated with banks' physical trading activities and potential regulatory changes that could mitigate those risks. The document, called an advance notice of proposed rule-making (ANPR), dwells at length on recent catastrophes such the 2010 Gulf of