By Alex MacDonald and Jenny Gross
LONDON--A Swiss government report Wednesday reaffirmed the
country's commitment to boosting transparency in the country's
roughly $20 billion commodities sector, but rejected a massive
overhaul of the current regulatory system.
The long-awaited report aims to find a balance between
strengthening Switzerland's attractiveness as a destination for
commodities trading and pressure to enforce tighter regulation of
Swiss-based commodities companies, some of which trade and extract
resources from unstable countries with weak rules of law.
The report was crafted in part to address concerns raised by
activist groups regarding corruption and desire for better
corporate governance.
"Switzerland already does a great deal to guarantee both its
competitiveness and its integrity as a center for conducting
business, including the business of commodity merchanting," the
report said. "Nevertheless, there do remain areas in which
Switzerland's efforts can and should be reinforced."
The Swiss commodities industry employs some 10,000 workers in
500 companies that account for some 3.5% of Switzerland's gross
domestic product, according to the report.
Company giants such as Glencore International (GLEN.LN) and
Cargill Inc. are attracted to Switzerland by its attractive tax and
regulatory regimes.
Concerns about upward movements in commodities markets have
renewed pressure on governments to clamp down on regulations, said
Thina Saltvedt, senior oil market analyst at DnB Nor. Brent oil
markets last month traded around $118 a barrel, a historically high
level, after falling below $90 a barrel last June.
"[The Swiss are] probably a bit afraid of over-regulating the
market--it can hurt a market rather than actually helping it," Ms.
Satlvedt said.
The 51 page report outlined 17 recommendations to improve
transparency and good governance within the industry including
reviewing the regime for combating illegal financial flows on
regular basis and drafting a consultation to consider the
consequences of introducing U.S. and European Union transparency
requirements to the Swiss commodities sector.
-Write to Alex MacDonald at alex.macdonald@dowjones.com and
Jenny Gross at jenny.gross@dowjones.com
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