“The risks associated with the removal of so much copper could have potentially devastating effects not just on potential investors in the shares, which should be a concern to the SEC, but also on existing and future investors in industries that depend on copper for their primary feedstock,” according to a letter from fabricators and major hedge funds, reports Reuters.
The NYSE Arca exchange has argued that concerns are “speculative and misplaced,” given the size of the funds.
The SEC has not stated on when it will make an official ruling; however, its decision will also affect the outcome of other similar funds filed.
Currently, the only copper-based fund products available hold futures contracts, including the iPath Pure Beta Copper ETN (NYSEArca: CUPM) and the iPath Dow Jones UBS-Copper Total Return ETN (NYSEArca: JJC). Additionally, it should be noted that the two are exchange traded notes, which are unsecured debt obligations issued by banks and subject to the bank’s credit risk.
For more information on copper, visit our copper category.
Max Chen contributed to this article.