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Thursday, 23 July 2015

Financiers attack EU rules against food speculation

The EU’s Markets in Financial Instruments Directive (MiFID) II, which was reformed in 2012 may be under attack from the financial sector to restart food speculation, according to Oxfam. The NGO is accusing the European Securities and Markets Authority (ESMA) of watering down the directive , so much so that the latest looks like “a wishlist” for banks and insurance. David Hachfeld, an expert on the economy and globalisation at Oxfam Germany says, “The financial sector has successfully inserted numerous exceptions and loopholes. As a result, the original goal of lawmakers, to prevent market distortions and price fluctuations has been undermined (…) There is reason to fear that the hunger for profit among powerful finance actors may continue to lead to price explosions in agriculture-related commodities.” Speculation in the futures market is also of top concern and have been growing in Europe since the liberalization of the EU’s Common Agricultural Policy (CAP). While Oxfam calls for a 15%limit on hedgefund or investment fund control of commodity markets, the current latest ESMA draft that indicates that they could be allowed to control up to 40% of a commodities market. There is also concern about the divisioni of positions in subsidiary companies which would distort the reality by giving corporations control of excess commodities and price-setting power.

Source: euractiv.com