Fed Approves Energy Managment and Tolling

The Royal Bank of Scotland submitted an application with the Board of Governors to engage in physical commodity trading, energy management services, and energy tolling.  The Board stated that it had previously found physical commodity trading and energy management services to be complementary to the financial activity of engaging in commodity derivatives transactions and investment advisory services.  The Board had not considered energy tolling before.  it found that energy tolling is an outgrowth of the financial activity of commodity derivatives transactions and allows the Financial Holding Company to hedge its energy positions and those of its clients.  The vague "complementary to a financial activity" standard has seemingly been interpreted broadly; it will be interesting to see where the lines will be drawn.