Banks’ physical commodity trading comes under scrutiny

Amid a review of a 2003 determination by the Federal Reserve, the involvement of US banks in physical commodities has come under fire from regulators, politicians and the media. Could they really be forced to exit physical trading? Alexander Osipovich reports

During the last two weeks of July, many Wall Street executives were undoubtedly looking forward to a much-needed summer break. But instead, bank commodity chiefs found themselves engulfed in a maelstrom of criticism about their firms' involvement in physical commodities.

On July 19, the US Federal Reserve Board said it was reviewing a 2003 determination that permitted financial holding companies (FHCs) – a category of firm that includes the parent companies of most US investment banks, as well