EU should crack down on commodity speculation

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3 May 2012 | Adam Leach

The European Union should bring in regulations to limit the impact of financial speculators on global commodity prices.

A joint statement from 25 civil society organisations, including Oxfam, the World Future Council, and the European Network on Debt and Development, called for EU regulators to bring in rules governing the amount of trades speculators can carry out on commodities markets.

The statement said regulators “should be able to step in when speculators are swamping markets with their huge bets”. New rules, according to the collection of organisations would enable the markets to “serve their basic functions for food producers and consumers”.

The report also called for over-the-counter trading, where two parties agree a trade, which is not carried out through an exchange and typically carries greater risks, to be regulated. They also called for a ban on high frequency trading, where traders employ an algorithm to trade large volumes on a single day in the market that can create a volatile environment in commodity markets.

Christine Haigh, campaigner at the World Development Movement, said in a statement: “Deregulation of commodity markets since the 1990s has led to increased food price volatility, contributing to the recent food price spikes that have left millions across the world facing hunger and poverty. We urgently need MEPs and the Council of Ministers to reregulate these markets, imposing strict limits on speculators.”

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