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Fed plans to tighten commodities rules for banks, says governor

Senate panel told that Fed expects to issue notice of potential new rules in the first quarter of next year

New York

THE US Federal Reserve is preparing to unveil new restrictions aimed at making it harder for Wall Street banks to make big bets in the commodities markets, according to testimony from Fed governor Daniel Tarullo.

Mr Tarullo struck an unexpectedly aggressive stance in his appearance on Friday in front of a Senate subcommittee that has been investigating the involvement of big banks in the markets for basic materials like coal, aluminium and gas.

Mr Tarullo said the Fed expected to issue a formal notice of potential new rules in the first quarter of next year. Those new regulations could force banks to amass more capital to protect against losses on holdings of commodities and restrict banks...

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