UPDATE 1-British watchdog gets complaint on base metal ETPs

* Financial Services Authority to examine issues raised

* ETF Securities and U.S. bank JP Morgan plan ETPs

* Traders say ETPs could distort market, prices

(Adds detail, comment)

LONDON, Nov 8 (BestGrowthStock) – Britain’s Financial Services
Authority said on Monday it has received a complaint about plans
to launch base metal exchange traded products (ETP).

“Because it (the complaint) has just recently been sent, we
have to look at issues that have been raised,” the FSA said.

“We are not a price regulator. Generally what we would look
at is the potential for market abuse or distortion of price and
consumer protection.”

Providers that in recent weeks have announced plans to
launch ETPs include U.K.-based ETF Securities and U.S. bank JP
Morgan (JPM.N: ). [ID:nN27567082]

ETF Securities said in early October it will introduce
physical ETPS for copper, aluminium, zinc, lead, tin, nickel and
a basket of the six major base metals. However, it has no date,
as yet, for the launch. [ID:nLDE69A0I5]

JPMorgan Commodity ETF Services (JPM.N: ) registered to launch
an ETP for copper in a filing with U.S. regulator the Securities
and Exchange Commission late last month. [ID:nLDE69O174]

For a factbox on recent copper ETPs, see [ID:nN27567082]

Traders said that an ETP could suck down London Metal
Exchange (LME) inventories that are already constrained by
declining ore grades and demand that is steadily improving since
the global economic crisis.

“People are saying they have or are going to complain to
the LME and the FSA. The argument is that they will distort the
market and tie up the stocks,” a metals trader said.

“My reaction is; how could the market be any more distorted
and non-related to the real world than it already is?”, he said,
referring to the growing levels of speculative investor
involvement on the London Metal Exchange.
(Reporting by Melanie Burton and Pratima Desai; editing by
Anthony Barker)

UPDATE 1-British watchdog gets complaint on base metal ETPs