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Fed to issue rules notice on banks and commodities in early 2015

The Federal Reserve will issue in the first quarter of next year a formal notice of rules it has been reviewing for financial holding companies and their activities in the physical commodities markets, a top official with the U.S. central bank said on Friday.

"We are conducting a careful and thorough assessment of the costs and benefits of financial holding company engagement in these activities," Fed Governor Daniel Tarullo said in prepared remarks ahead of a Senate subcommittee hearing on the issue of banks' involvement with physical commodities.

Read MoreFed launches review of supervision of major banks

Banks have come under heavy scrutiny for the huge stockpiles of oil, natural gas, electricity and metals and other commodities that they have accumulated as a compliment to trading and hedging operations.

The Fed has been reviewing how it regulates large banks with physical commodity holdings, and it invited public comments earlier this year.

The timing of the Fed's plan to issue a formal notice of public rulemaking on the issue in the first quarter was not previously known.