In a surprise statement last week, JPMorgan announced that it was exiting physical commodities trading. The shake-up comes after Wall Street’s role in the trading of raw materials comes under unprecedented political and regulatory pressure.
JPMorgan is the first big player to completely exit physical commodities and the attention will now turn to Morgan and Stanley and Goldman Sachs, which face similar pressures.
The firm will explore “a sale, spinoff or strategic partnership” of the physical business championed by commodities chief Blythe Masters, and a sale could help put the bank back on track after some costly moves including a potential $410 million settlement over alleged power market manipulation.
After spending billions of dollars and five years building the biggest commodity desk, JPMorgan said it would pursue “strategic alternatives” for its trading assets, with a global team dealing in everything from African crude oil to Chilean copper.