FSA warned commodities ETFs 'next financial bubble'

The FSA has been warned new commodities ETFs launched by investment banks pose a danger to the metal markets.

Metal traders have written to the City watchdog claiming licensing the so-called physically-backed exchange-traded funds (ETFs) could amount to "approving the next financial bubble", writes the Telegraph. Banks including JP Morgan, Goldman Sachs and Deutsche Bank have said they plan to launch such funds shortly. Traders' concerns are based on the ETFs' model that will require the investments to be backed by physical metals, such as copper, lead, aluminium and nickel, rather than paper assets offered by futures contracts. Read more