Metals traders told not to delete files

The US commodities market regulator has put Wall Street banks and other big traders on notice for a possible investigation of their metals warehousing businesses following years of complaints about inflated prices.

The US Commodity Futures Trading Commission (CFTC) sent a letter to firms last week ordering them to preserve e-mails, documents and instant messages from the past three years, two sources who received the letters said.

The notice amounted to a "warning shot" before a probable formal probe, one of the sources said.

If there is an investigation, it would be the first by any regulator into the lucrative and controversial industry, which since 2010 has become dominated by banks including Goldman Sachs and JP Morgan Chase and global merchant traders like Glencore Xstrata and Trafigura.

The letter from the CFTC's enforcement division did not refer to an investigation, but the do-not-destroy order touched on some of the most sensitive issues in a controversy that has plagued the London Metal Exchange, now owned by Hong Kong Exchanges and Clearing, for years.

The CFTC said the firms should retain communication related to incentives or premiums given to metal producers in exchange for storing metal; daily loading rates; high load-out requests; delivery policies and procedures and complaints about load-out requests.

At least two companies involved in warehousing received the letter, but sources said they believed such notices were sent to all the major players.