EU pledges to rein in derivative trades
Following a French call for urgent new rules after a summer of fears about the fallout from soaring grain prices, the EU commissioner responsible for financial trading rules, former French foreign and agriculture minister Michel Barnier, said he fully shared the concerns in Paris.
He wants control at European and world level of derivatives trading in energy, metals and agricultural products and will make proposals to EU member states and the European parliament next month.
Derivatives are often complex financial instruments based on underlying physical goods and play a vital role in, for example, enabling companies and traders to hedge or insure against risk.
But big flows of money into such markets can leave the price of the underlying physical product highly volatile.
Nowhere is this more likely than in the oil business, where trade in instruments for the future delivery of oil amounts to 35 times the volume of contracts for actual physical delivery of oil.
On page 3: The possibility of another global food boom-and-bust cycle, and the feed bill outlook for Irish livestock farmers.
