In building up the commodities business, JPMorgan has “focused on our client franchise, but one where with changes in regulation, particularly around the physical side, we’ll be making sure we optimize that business for the new world we’re in,” Cavanagh told investors at a Feb. 26 meeting at the company’s New York headquarters.
The 10 largest Wall Street banks generated about $1 billion from physical commodity units in 2012, and about $5 billion from commodity derivatives and financing, according to data from analytics company Coalition Ltd. Goldman Sachs ranked No. 1 in all commodities revenue, including derivatives, followed by JPMorgan.
Goldman Sachs held $7.7 billion in physical commodities and Morgan Stanley had $6.7 billion, according to filings. Spokesmen for those firms declined to comment on JPMorgan’s announcement.
“This whole area of banks owing the physical, warehousing and delivery mechanisms of commodities is one that policy makers need to thoughtfully consider, and soon,” Commodity Futures Trading Commission member Bart Chilton said yesterday in an e- mail. “Banks getting back to being banks and making loans to businesses and individuals seems like the best course of action. Perhaps that will happen without any policy changes, although I have definite doubts.”
Mary O’Driscoll, a spokeswoman for FERC, and Barbara Hagenbaugh, a spokeswoman for the Fed, declined to comment on JPMorgan.