The European Commission is taking aim at growing speculation and volatility in commodity markets, using its plan to reform wider financial markets, just as EU grain futures hit contract highs Sept. 20.
Michel Barnier, the European Commissioner in charge of financial reform services, said at a conference that he wanted to use a planned revision of the Market in Financial Instruments Directive (MiFID) to reform commodity markets.
“The revision of MiFID is one of the key elements of an ambitious reform of the raw materials markets,” the EU’s financial markets chief said, stressing that commodity market regulation was high on his agenda.
“We are ready to go further. This is a key issue. We will not hesitate to consider further measures,” Barnier added.
European commodity markets are under pressure to tighten regulation as the United States pushes forward with plans to tame speculative activity, blamed by some for boosting food and energy prices to record highs in 2008.
EU Agriculture Commissioner Dacian Ciolos said he wanted the EU executive’s plan to specifically include the issue of position limits on futures markets.
“We need to go further, especially today on the issue of position limits to counter excessive movements,” he said.
“The role of the futures market is not to feed speculation and some actors’ profits. The role of futures markets is to offer tools to anticipate, manage volatility and contribute to the matching of supply and demand,” he said.
Volatility has been a persistent concern in recent months, with wheat gaining more than 60 per cent in the five weeks to Aug. 5 on record volumes as drought-hit Russia, the world’s third-largest grain exporter, banned exports.
European grain and oilseed futures powered up on Monday with wheat, maize and rapeseed prices hitting their highest level since the summer of 2008.