Battle lines drawn over commodities trading
Commodities trading firms and exchanges are in the process of drafting robust responses to new rules, outlined under the European Commission's review of the markets in financial instruments directive, which they fear European governments may use as a 'back door' for price controls. The European Commission's proposed rules seek to prevent traders from manipulating commodities markets, a common political accusation in the summer of 2008 when food and energy prices soared to record highs. The EU is following in the footsteps of the US, which introduced similar rules under the Dodd-Frank Act passed in July last year.
London-based trading groups fear that the new rules outlined under Mifid will be used by some European governments as a means of direct price control, undermining the free market.
Anthony Belchambers, chief executive of the Futures and Options Association, said: "There is a big question mark over whether the new Mifid rules on the financial participation in commodities markets have been introduced as a result of government agitation over commodities speculation, and will be used as a back door to introduce price control into what is a free-price formation market."
Publication
Financial News
Date
January 24, 2011
Cross References (links may require a Cabinet subscription)
Dodd-Frank Act, Title VII, Sec. 737