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EU negotiators have agreed to introduce regulation to prevent speculation by banks and hedge funds driving up food prices and exacerbating the global hunger crisis.
The new controls will place a limit on the number of food contracts that banks and other finance companies can hold, and will force traders to open their activity to greater public scrutiny.?
Anti-poverty campaign group the World Development Movement has hailed the decision as an historic step forward, but said that the UK government’s opposition to tough controls has resulted in serious loopholes in the regulation. In particular, limits will be set at national rather than EU level, which campaigners say risks a regulatory ‘race to the bottom’ as countries could compete to set weaker limits.?
The group is urging the European regulator ESMA to ensure that the new rules are implemented effectively, and not watered down further by industry lobbying.? ?
Goldman Sachs, Barclays, Deutsche Bank, JP Morgan and Morgan Stanley together made an estimated £2.2 billion from speculating on food including wheat, maize and soy between 2010 and 2012.
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