Wilmington Trust Renews Plea to Comex
Undaunted by having failed twice, Wilmington Trust Co. said it will apply again to become a registered depository of Commodity Exchange Inc.
The Delaware bank could provide the gold and silver markets with improved liquidity, better distribution channels, and lower costs, said Jonathan Potts, assistant vice president of precious metals programs.
The largest locally owned bank in Delaware has been frozen out by a Commodity Exchange bylaw that requires depositories to be in Manhattan.
To house a 5,000-troy-ounce Comex silver contract, New York depositories charge $18 a month, Mr. Potts said in an interview during the Silver Institute's annual conference at Coeur D'Alene, Idaho. A 100-troy-ounce gold contract costs $6 a month.
Lower Fees Foreseen
"Our [storage] rates are considerably less," Mr. Potts said - about 45% less for silver and 10% to 15% less for gold. The bank's outcharges, or fees for moving metal out of depositories, are also lower than those of New York depositories, he said.
"That's a definite advantage," Mr. Potts said. "The trouble is that we're applying for something we don't qualify for."
The Comex would welcome another application from Wilmington Trust, said Hugh Sigmon, vice president of marketing at the exchange.
Because of the New York site requirement, any approval of Wilmington Trust would require amending the Comex bylaws, Mr. Sigmon said. And any bylaw change would require approval of the Commodity Futures Trading Commission, he added.
"We have multiple delivery locations for copper, and changing the bylaws is something that can be done. But that would be up to the metals committee" of the Comex board of governors, Mr. Sigmon said.
He said that Wilmington Trust has not won approval because the metals committee felt a change in the bylaws "was not in the best interest of the market."
"Cheaper storage rates are one thing, but we're in the trading business, not the storage business," Mr. Sigmon said.
Asked whether Wilmington Trust plans to apply for Comex membership to facilitate the approval process, Mr. Potts said, "Not at this point. We are strictly a depository, not a trading organization."
In July, Comex signed up Bankers Trust Co. as a depository for gold and silver, the first such addition to the precious metals depository in more than a decade.