JP Morgan Chase, which said last month it plans to get out of the business of owning and trading physical commodities from metals to oil, has bought the over-the-counter commodity derivatives portfolio of UBS, which is exiting most of its raw-materials trading.
Bloomberg News reports that the transaction includes on-exchange hedge positions and excludes precious metals and index-based products.
Banks are scaling back or exiting their commodities operations amid regulatory scrutiny and lower profits from raw materials. Revenue in commodities at the 10 largest investment banks fell 25% in the first half of the year, analytics company Coalition said.
UBS last year decided to close its oil, base metals and agriculture trading desks, a person with direct knowledge of the decision said October 31.
The bank is keeping its index-investor products and precious metals trading.
Hit the link below to access the complete Bloomberg article: