15 January 2014

Africa: EU Deal On Curbing Food Speculation Comes None Too Soon

press release

Today the European Parliament and the Greek EU Presidency sealed a deal on the reform of the Markets in Financial Instruments Directive (MiFID), which sets new regulation for financial markets.

The deal includes new rules to limit speculation on financial products linked to what we eat. These so-called 'commodity derivatives' are derived from commodities, including agricultural commodities such as wheat, corn, soybean or sugar.

In a reaction to today's deal, Marc Olivier Herman, Oxfam's EU policy advisor, said:

"Today's decision marks a good start in tackling 'gambling' on food prices which are a matter of life and death to millions in the developing world. The agreement introduces limits on speculating in spite of attempts by the UK and other governments to block any meaningful reform."

"The Parliament has succeeded in making significant improvements to the legislation. 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 per cent 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."

"The deal is far from perfect. Unjustified exemptions were granted to powerful lobbies and limits will be set nationally, rather than at the European level. There is a real risk, particularly in the UK, of ineffective sky high limits triggering a regulatory race to the bottom between European countries."

"The European Commission and the European Securities and Management Authority must now take a lead in ensuring that position limits are implemented effectively."

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