Commodity trading houses face questions over systemic risk
The rapid growth of commodity trading houses has led critics to question whether these firms have become a source of systemic risk. But trading houses strongly reject such arguments, and suggest they are little more than paper tigers. Alexander Osipovich reports
Since 2008, regulators have been scouring the earth for potential threats to the global financial system. That has taken them beyond the usual suspects in the banking sector – insurers, for example, have lately been caught up in the floodlights. On July 18, the Basel-based Financial Stability Board (FSB) added nine large insurers to its list of global systemically important financial institutions (G-Sifis) – a term for companies that are deemed too big to fail. The insurers joined 28
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