JPMorgan Cuts Back on U.S. Silver Futures

JPMorgan has quietly reduced a large position in the US silver futures market that had been at the centre of a controversy about its impact on global prices for the precious metal. The decision by JPMorgan was an attempt to deflect public criticism of the bank's dealings in silver, a person familiar with the matter said. The person added that the bank's position in silver would from now on be "materially smaller" than in the past. A group of small precious metals investors has alleged that large short positions -- or bets on lower prices -- in silver futures held by several banks, including JPMorgan, are keeping prices artificially low.

The US regulator, the Commodity Futures Trading Commission, announced in September 2008 that it was investigating complaints of misconduct in the silver market, although it did not name specific entities. But Bart Chilton, a CFTC commissioner, said in October that he believed there had been "fraudulent efforts" to "deviously control" the silver price. He did not name any party. Publicly available data on individual traders' positions are sketchy. In a speech last Wednesday, Mr Chilton said that "earlier this year, one trader held more than 40 per cent of the silver market." He declined to identify the trader.

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