The Planned Launch Of An Aluminum ETF Is Opening New Doors For Investment Banks (GS, CS, AA)
“The migration of some of Wall Street’s biggest banks into the physical aluminum market is a strategic progression toward the creation of an exchange-traded fund (ETF), the director of material management with the world’s largest aluminum producer said on Tuesday,” Reuters Reports.
“There is still plenty of risk capital around to finance metal … It’s one of the reasons why the ETFs are becoming more attractive,” said Greg Wittbecker, director of material management with Alcoa (NYSE:AA) told Reuters on the sidelines of Harbor Intelligence’s third annual aluminum outlook conference. “People are being attracted to more fungible assets … the simple reality is that somebody has to be given the incentive to finance that pile of metal,” he said.
Reuters goes on to say, “The planned launch of a physically backed aluminum ETF between Credit Suisse (NYSE:CS) and Glencore International has opened the door to a whole new world for the investment banks. Goldman Sachs (NYSE:GS) has stepped into the fray as well, with its purchase of London Metal Exchange warehousing company Metro International Trade Services in February.”
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“It’s a natural extension of that strategy that they want to own warehousing capacity as a means of developing their own ability to price that warehousing and make their ETF more successful,” Wittbecker said.
“Warehousing and financing deals are enabling banks to reap even more money by allowing them to buy cash metal cheaply, sell it forward at a profit and strike a warehouse deal to store it cheaply for an extended period of time,” Reuters Reports.
See more to Reuters Report: HERE
Visit Our Aluminum ETF Category For More Insights: HERE
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