U.S. Senator Carl Levin opposes planned ETFs designed to hold physical copper, arguing the funds would create a boom and bust cycle in the market.
“There is ample evidence that if the ETF shares are listed and traded on the NYSE exchange, the trust will disrupt the global supply of copper,” Levin wrote in a letter to the SEC, Reuters reports.
JP Morgan and BlackRock’s iShares have filed to launch exchange traded products backed by copper. There are already copper-themed ETFs trading but they invest in commodity futures contracts or shares of copper producers.
“It will make the copper market more susceptible to squeezes and corners by speculators,” Levin said in the Reuters article. [Physical Copper ETFs Hit Roadblock]
Earlier this year, a law firm that represents major copper producers and traders sent a letter to the SEC saying physical-backed copper ETFs would artificially boost the commodity’s price. [JP Morgan’s Planned Copper ETF Draws Opposition]