Javier Blas of the FT just posted an article about a report “written by a leading academic on commodity markets” on whether commodity trading firms (like Cargill or Vitol) are sources of systemic risk.
What, haven’t heard about that report? Well, that’s the main point of the story. The report was spiked by the GFMA, a banking trade association, which commissioned it. According to Javier:
However, the report was never completed and remained in a “draft” status, after its conclusions went against the interest of the lobby group, three people familiar with the matter said.
So yes, perhaps you’ve guessed by now that the academic in question is me (though you have to read 2/3s of the way through the story to get to my name). And yes, that’s pretty much what I understood to have happened, though I was never told that in so many words. It’s nice to have it confirmed by “three people familiar with the matter”, even though it was blindingly obvious to me at the time. *
I call them like I see them. GFMA didn’t like that. I wouldn’t change the call, so they sat on the report. So it goes.
I think GFMA handled this badly even from the perspective of its own interests, though I guess I am not really surprised: this is the way organizations like this tend to behave. I am sure this has given the report more visibility than it ever would have achieved otherwise, and makes GFMA look bad in the bargain, at least in my (probably biased) opinion. The regulatory body they were trying to influence-the FSB-was briefed on the findings, and had a draft of the report, so deep-sixing the report only signaled to the FSB that GFMA didn’t like the results, which it probably knew anyways. Spiking the report also serves to validate the independence of the findings-and of the finder of the findings. That’s definitely an upside for me.
Working on the report helped me learn a good deal more about the global commodity trading firms, so that’s also a good thing. I look forward to learning and writing more in the future.
*For the record, the copy of the report “seen by the Financial Times” didn’t come from me.