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Commodity Traders’ Expansion on Easy Money Seen as a Risk

Commodity trading companies active in multiple markets have used easy access to finance to expand their physical holdings, creating a potential “systemic” risk, according to two research groups in Brussels.

The merger of Glencore and Xstrata Plc signals commodity trading has reached “a tipping point,” where more investments in physical holdings rather than futures or services may lift profitability, according to a report by the Centre for European Policy Studies with the European Capital Markets Institute.