The Markets in Financial Instruments Directive (MiFID) includes measures to limit speculation on commodity derivatives – staple agricultural commodities like cereals, oilseeds and sugar – which has been linked to food price volatility.
Commissioner Michel Barnier, who led the negotiations, said that the new, harmonised system would set limits on positions held in commodity derivatives and “contribute to orderly pricing and prevent market abuse, thus curbing speculation on commodities and the disastrous impacts it can have on the world's poorest populations”.
NGOs cautiously welcomed the new rules.
Friends of the Earth Europe’saccountable finance campaignerAnne van Schaik said: "Food speculation costs the world's vulnerable the food on their plates. A new EU law that cuts this unethical trade is welcome. However with national governments having the possibility to set position limits, it remains to be seen whether they will really rein in this destructive practice, or fall victim to corporate greed."
Oxfam’s EU policy advisor Marc Olivier Herman said that the agreement was a good start to tackling ‘gambling’ on food prices.
“The parliament has succeeded in making significant improvements to the legislation,” he said. “Limits to the bets that speculators can make will apply to contracts traded ‘over the counter’ and throughout the lifetime of the contracts. This is good news for millions in the developing world, who can spend up to 75% of their income on food, as well as producers who rely on stable food prices. It is also important for people across Europe struggling to cope with high and volatile prices.”
However, he added that the deal was far from perfect, and it was now up to the Commission and the European Securities and Management Authority to ensure the position limits were effectively implemented.
“Unjustified exemptions were granted to powerful lobbies and limits will be set nationally, rather than at the European level,” he said. “There is a real risk, particularly in the UK, of ineffective sky high limits triggering a regulatory race to the bottom between European countries.”
More information on the directive is available here.