Commodity trading both on and off exchange could face tighter scrutiny after the publication of a report into the market by UK's Financial Services Authority (FSA).
The report, published on 26 March, outlines the risks and challenges associated with commodity trading in reference to both exchanges and firms using the marketplace. This is something which the watchdog said has been highlighted by the significant increase in trading participation which it says poses a threat to financial stability.
"There has been a significant expansion in commodities investment in recent years, bringing with it a range of new participants. These developments raise various risks and challenges for those involved. It is essential that all parties fully appreciate and address these risks," the report said.
FSA claimed that trading firms are very susceptible to market risks. In particular,...