EU examines how UK taxes commodity derivatives | Giancarlo to propose derivatives-rule changes this year | China threatens to counter US tariffs
March 15, 2018
Commodities Insight SmartBrief
Regulatory insight and top news for commodities markets
Regulatory & Compliance
EU examines how UK taxes commodity derivatives
The European Commission has notified the UK it is under investigation regarding tax treatment of exchange-traded spots, futures and options on commodities.
Financial Times (tiered subscription model) (3/9),  Futures & Options World (subscription required) (3/9),  Politico Pro (subscription required) (3/9) 
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Giancarlo to propose derivatives-rule changes this year
Giancarlo to propose derivatives-rule changes this year
Giancarlo (Commodity Futures Trading Commission)
Commodity Futures Trading Commission Chairman J. Christopher Giancarlo plans to propose changes this year to derivatives regulation under the Dodd-Frank Act. The goal is to "better align to inherent market dynamics, fully allow US swap intermediaries to fairly compete in world markets and begin to reverse the tide of global market fragmentation," he says.
Financial Times (tiered subscription model) (3/14),  SmartBrief/Finance (3/14) 
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China threatens to counter US tariffs
Dismissing the Trump administration's stated security justification for imposing stiff tariffs on steel and aluminum, China's Commerce Ministry said it would respond with "strong" measures. "The misuse of the 'national security exception' clause by the United States destroys the multilateral international trade order espoused by the WTO, and China will firmly oppose it," said Wang Hejun, who leads the ministry's trade remedy and investigation bureau.
Argus Media (3/9) 
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Dodd-Frank revision clears Senate, heads to House
The Senate has passed a bill that would revise the Dodd-Frank Act to ease rules for small banks. House Republicans say they plan to add provisions, though Democrats say major changes could jeopardize bipartisan support.
Bloomberg (free registration) (3/14),  Reuters (3/15),  The Wall Street Journal (tiered subscription model) (3/14) 
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Fed official says revision of Volcker rule on course
Federal Reserve Vice Chairman Randal Quarles said at a banking conference that the Volcker rule is "a complex regulation that is not working well" and that regulators are working "with dispatch" to simplify it. Quarles said the Fed is also considering easing restrictions on how foreign banks operating in the US can invest in foreign funds.
Bloomberg (free registration) (3/5),  Reuters (3/5) 
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Fed's Quarles reportedly under consideration to lead FSB
The Trump administration is considering pushing for Federal Reserve Governor Randal Quarles to become the next chairman of the Financial Stability Board, sources say.
Financial Times (tiered subscription model) (3/15) 
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Hot Topics
This Week in Commodities
Ag sentiment gauge buoyant, but NAFTA worries loom
Supported in part by optimism over trade, the Purdue/CME Group Ag Economy Barometer last month climbed to its second-highest level in two years. A specific query on NAFTA, however, yielded a decidedly mixed outlook for continued US participation.
Farm Futures (3/6),  World Grain (3/6) 
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Gradual global shift to services may weigh on commodities
Coordinated global growth has been a source of firm support for commodities, but longer-term problems are emerging with a shift from manufacturing to services, a trend that prominently includes China.
Bloomberg View (free registration) (3/13) 
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US metal tariffs a warning sign for soybean producers
US soybean producers are wary that US tariffs on steel and aluminum imports could lead to impaired trade in their product, particularly with China.
Financial Times (tiered subscription model) (3/13) 
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LNG market increasingly obeys supply-demand law
China's industrial policies and other factors are causing more of the liquefied natural gas market to follow the law of supply and demand.
Nikkei Asian Review (Japan) (tiered subscription model) (3/12) 
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Threat of oil glut triggers short selling
Short selling is returning to the oil market as traders worry a surge in US production could lead to oversupply. Hedge funds are increasing positions that prices on West Texas Intermediate crude will fall in light of record-high production.
Bloomberg (free registration) (3/12) 
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Banks aim to make London gold market more transparent
The London gold market's five settlement banks are overhauling rules to let members join in hopes of making the market more transparent and competitive. The restructuring is also designed to "provide additional safeguards to the market in the form of revised rules incorporating the latest anti-bribery and corruption provisions," says London Bullion Market Association CEO Ruth Crowell.
Reuters (3/8) 
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China's oil-market influence years away, experts say
Shanghai International Energy Exchange is set to launch crude oil futures contracts March 26, opening China's commodity markets to foreign traders and challenging the US dollar's status as the oil-market currency. However, experts say it will take years for the yuan to influence the oil market.
Bloomberg (free registration) (3/7) 
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Noble's restructuring plan is complicated
Noble Group, formerly the largest commodity trader in Asia, has a complex and potentially controversial restructuring plan to survive turmoil and debt. The plan, backed by an ad hoc investor group that includes hedge funds, eases imminent demand for a substantial debt repayment but leaves bondholders significantly out of pocket.
Reuters (3/12),  Bloomberg (free registration) (3/15) 
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Slow-reacting CTAs face hard times, expert says
Commodity trading advisers saw a 6.4% price drop in February, the worst month in 17 years, according to Societe General. Funds did not react quickly enough to the equity market, says Quest Partners founder Nigol Koulajian, and strategies that have worked in the past are "unlikely to work in coming years."
Bloomberg (free registration) (3/7) 
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CME Group Insights
Narrower index of China's growth offers key commodity insights
None other than Chinese Premier Li Keqiang has expressed reservations about China's official GDP number, with Li suggesting three alternative measures, writes Erik Norland, senior economist of CME Group. By these -- the annual growth pace of outstanding bank loans, electricity usage and rail freight -- growth appears a good deal more volatile than GDP indicates, providing a superior gauge for commodity investors.
CME Group (3/8) 
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