SIFMA, the American Bankers Association (ABA), the Financial Services Forum (FSF), The Financial Services Roundtable (FSR) and the Institute of International Bankers (IIB) provide comments to the Board of Governors of the Federal Reserve on Complementary Activities, Merchant Banking Activities, and Other Activities of Financial Holding Companies Related to Physical Commodities, Docket No. R-1479; RIN 7100 AE-10.

The Associations strongly believe that the public benefits of continuing to permit FHCs and their non-bank affiliates to engage in physical commodities activities greatly outweigh the potential risks of those activities, whether conducted under the complementary, grandfathering or merchant banking authorities.

The Associations do not believe that the tail risks associated with providing market making and other client intermediation services in physical commodities, including making or taking physical delivery of, maintaining inventories in, or contracting in the ordinary course for the storage, transportation or other handling of physical commodities (“Commodity Intermediation Activities”), pose “unique and [more] significant risks to financial holding companies, their insured depository institution affiliates or U.S. financial stability” than any number of other permissible banking and other financial activities, including the core banking activity of maturity transformation or the core financial activity of market making in financial instruments.