Tuesday, May 24, 2011

UK government committee launches investigation into monopolistic trading practices by JP Morgan on London Bullion Exchange

Interesting item has come across Reuters earlier today. 

As many of the manipulative silver practices utilized by JP Morgan have been shifted away from the CFTC's reach at the COMEX and onto the London Bullion Exchange, news comes out that a UK government committee asking the UK Office of Fair Trading to launch an investigation into the activities of large dealers on the London Metal Exchange.

The allegations are that the four large companies that own LME registered warehouses are engaging in 'restrictive' business practices.  JP Morgan, as owner of warehouser Henry Bath, is specifically named in the allegations.

The UK Committee's allegations can be found here. From the link:
  • 79. We heard that there were large companies dealing metals within the UK and an allegation was made by the MMTA that a company through a subsidiary may be behaving in an anti-competitive manner: on the London Metal Exchange there are four very large companies that own the very warehouses that people deliver metal into, J.P. Morgan is one of them.
  • They own a company called Henry Bath. They are, therefore, a ring-dealing member of the exchange and they also own the warehouse. That is restrictive. They were also reported, at one point, to have had 50% of the stock of the metal on the London Metal Exchange.[113]
  • 80. We would be concerned if the ownership of metals storage warehouses by a dominant dealer on the London Metals Exchange were to be anti-competitive. We would also be concerned if a dealer who had the resources to own over 50% of stock on the London Metals Exchange impeded the correct functioning of the market.
  • 81. We use this report to bring the alleged activities of large dealers on the London Metals Exchange to the attention of the Office of Fair Trading. We would be concerned if a dealer were undermining the effective functioning of the market and we look for assurance that the market is functioning satisfactorily.
The LME's initial response is that the assertion is "unjustified and completely out of context".

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