(Adds Fed declining to comment, details on oversight review)
WASHINGTON, Nov 3 (Reuters) - The U.S. Federal Reserve is considering requiring banks that handle physical commodities to increase their capital buffers as a hedge against accidents, such as tanker spills or gas pipeline explosions, the Financial Times reported on Tuesday.
The paper, citing people briefed on the matter, said the U.S. central bank wants to use the new capital requirements to discourage banks from risky activities that could threaten their survival in the event of a catastrophe.
The report suggests the Fed may be closer to finalizing new rules as part of a years-long review of its oversight of banks' physical commodities operations.
Fed Governor Daniel Tarullo said in November last year the bank was considering introducing new rules that would increase capital and insurance requirements, limit the size of the operations or prohibit certain commodities held by the firms.
In the past few years some of Wall Street's biggest banks, including Morgan Stanley and JPMorgan Chase & Co, have retreated from trading physical commodities from crude oil to aluminum and sold assets like metals warehousing operations due to regulatory scrutiny.
The measures could affect those banks still involved in handling physical commodities, including Goldman Sachs Group Inc .
The Fed declined to comment on the report. (Reporting by Timothy Ahmann in Washington DC and Josephine Mason in New York; Editing by Mohammad Zargham and Tom Brown)