Little will be
done to curb harmful food speculation today as EU finance ministers meet to
approve their position on the new Markets in Financial Instruments Directive
(MiFID II) – which sets new regulations for financial markets. According to a
broad coalition of environmental and development organisations, loopholes in
the legislation will render it ineffective to prevent food speculation, and the
resulting food price spikes that hit the poorest the hardest.
Schaik, accountable finance campaigner at Friends of the Earth Europe, said: "Food speculation profits financial institutions, and
costs the world's most vulnerable the food on their plates. Watertight
regulation of food speculation is vital to prevent excessive speculation
driving up food prices – but finance ministers have failed to agree effective
controls, such as limits to the bets that speculators can make."
Olivier Herman, EU policy advisor at Oxfam, said: "EU governments failed to tackle the systemic risk that
unbridled speculation poses to world food security. It is now crucial that the
European Parliament takes a stronger position in upcoming negotiations on
behalf of the millions in poor countries who are hit by high and unpredictable
food prices, and for families in the EU who feel the impacts of rising food
expressed concern that European regulators will not set adequate EU-wide limits
to the bets speculators can make and that limits may not be comprehensive or
applicable to all types of traders – which will allow financial institutions to
Haigh, policy officer at the World Development Movement said: "We are deeply concerned over the fact that in the current
text, limits on speculation will be set at national level, rather than being
consistent across the EU. This will pit the member states against each other in
a 'race to the bottom' to set the weakest limits".
Vander Stichele from SOMO said: "The
new legislation will not be effective if there are no clear position limits on
over-the-counter commodity derivatives or 'swaps', often linked to speculative
trading. The US has put such limits into law and the EU must follow suit in
order to prevent traders from avoiding these new rules. The EU has been giving
in to too many demands from the financial services lobby."
between the European Parliament and Council will continue with an agreed text
due for adoption in March 2014, supported by the European Commission. The
organisations identified eight of the most dangerous loopholes and outlined
solutions  – to ensure European policy-making puts the hunger of people
before the greed of financial institutions and puts a stop to the damage done
by financial markets through excessive and harmful speculation.
Denmark, Corporate Europe Observatory, Foodwatch, Friends of the Earth Europe,
Oxfam, SOMO, World Economy, Ecology & Development – WEED and the World
Development Movement have
identified eight of the most important loopholes which remain in the current
text and have outlined how to fix them.
new report from a group of Belgian development NGOs and the Network for
Alternative Financing casts new light on the involvement of financial
institutions based in Belgium in food speculation.