directive lays out improvements, but loopholes remain
Food speculation by banks and
financial institutions has contributed to rapid and unpredictable swings in
food prices over recent years, with devastating impacts on poor people in
developing countries. The European Union will introduce new regulations which
take small steps towards curbing the financial speculation on food crops,
according to Friends of the Earth Europe, after a deal was struck last night
between the European Parliament and Greek EU Presidency.
The agreement on the review of the
Markets in Financial Instruments Directive (MiFID) - which sets new regulations
for financial markets – will curb the amount of shares a trader can hold.
National governments will set position limits, or limits on the amount of
shares a speculator can hold on the market, with oversight and direction by a
European body, the European Securities and Management Authority (ESMA).
Anne van Schaik,
accountable finance campaigner at Friends of the Earth Europe said: "Food speculation costs the world's
vulnerable the food on their plates. A new EU law that cuts this unethical
trade is welcome. However with national governments having the possibility to
set position limits, it remains to be seen whether they will really rein in
this destructive practice, or fall victim to corporate greed."
Although the improvements are
welcomed by Friends of the Earth Europe, the proposal contains some serious
loopholes which could allow speculation to continue, and falls short of the
European-wide limits needed to fully rein in the destructive practice of food
speculation. Friends of the Earth Europe is concerned that national governments
will set limits as low as possible, starting a 'race to the bottom',
effectively undermining regulation. In addition, changes to the reporting
criteria for financial institutions in the text could now also aide attempts to
monitor food speculation.