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New EU market rules leave millions of people at mercy of volatile food prices
Today the European Commission published the rules implementing provisions of the Markets in Financial Instruments Directive of 2014 (MiFID) to limit speculating on the price of food and other basic commodities.
In response, Marc-Olivier Herman, Oxfam EU food policy expert said: “Despite strong support from the European Parliament to end gambling on food prices, the Commission has adopted rules that will allow national regulators to set very high and ineffective limits.
“Food prices are a matter of life and death to millions in the developing world, who can spend up to 75 per cent of their income on food. Stable prices are also essential to food producers. The European Parliament must strike down the rules proposed by the Commission and ask for tighter rules that will apply to a broader set of contracts.”
- The rules implementing the provisions of the Markets in Financial Instruments Directive of 2014 (MiFID) were adopted today by the European Commission. The MiFID was formally enacted in June 2014 after a deal was reached between the European Parliament and the European Council in January 2014. At the time Oxfam welcomed the deal.
- The new rules introduce so-called position limits, which cap the number of contracts in a particular commodity that can be held by a trader or group of traders, preventing concentration by the individual or group concerned. This ensures speculators do not exert an excessive influence on prices. The rules adopted today by the European Commission will allow speculators to control up to 35% of the deliverable supply of food commodities linked to financial derivatives. Moreover, the definition of the contracts concerned leaves open the possibility of circumventing the limits.
- Deregulated and secretive agricultural commodity derivatives markets have attracted huge sums of speculative money prices. See Oxfam’s briefing Not a Game: Speculation vs Food Security - Regulating financial markets to grow a better future.
- The European Parliament now has a period of three months to reject the proposed rules and mandate the Commission to redraft them.
Simon Hernandez-Arthur in Washington, D.C.| firstname.lastname@example.org |+1 585 503 4568