Deutsche Bank Withdraws from Metals Fixing; Other Frims Follow Suit

by on January 20, 2014 3:27 am BST

Deutsche Bank will no longer be part of gold and silver fixing as the firm is cutting back on its commodity trading. After announcing a cut of 200 jobs in raw material positions, the German banking unit will sell its fixing memberships for both gold and silver fixing and no longer submit gold forward offered rates.

This decision comes as top firms cut back on their commodity exposure, and the UK Financial Conduct Authority (FCA) is beginning to look into how gold prices are set in a market worth nearly $20 trillion. Regulators have now looking into the fixing measures and how prices are set as price manipulation has become commonplace among several markets.

Deutsche Bank released a statement that said it was scaling back their commodities business but will “… remain fully committed to our precious metals business.” The bank will continue the fixing, with fellow banks HSBC Holdings PLC, Societe Generale, Barclays PLC, and Bank of Nova Scotia, until the membership is sold.

Precious metals is not the only commodity industry being abandoned by Deutsche Bank. Their energy, dry bulk and agriculture business, and even currencies, will also be cut. Another firms like JP Morgan and Citigroup are lessening exposure, if not cutting commodity divisions all together.

JP Morgan looking to sell its physical trading unit, while Morgan Stanley cut 10 percent of their commodity division personnel. Citigroup noted that the bull cycle in commodities has ended because supply finally caught up with demand.