The European Parliament has today given approval to rules adopted by the Commission under the framework of the Markets in Financial Instruments Directive (MiFID II), despite widespread concern that it will allow harmful commodity speculation to continue. The Markets in Financial Instruments Directive of 2014 was supposed to introduce strict position limits to curb excessive speculation on food and other vital commodities such as energy. Unfortunately, the delegated act adopted by the Commission in December 2016 is a very weak interpretation of what was mandated in the MiFID II Directive, and Greens/EFA MEPs voted to reject it (1). A large majority of conservatives, liberals and christian democrats supported the weak rules.
MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group commented:
“It is disgraceful that the European Parliament has today capitulated on commodity speculation, after having fought hard for a strong deal three years ago. Instead of the tough rules we need to fight ruthless food speculation, we are left with a weak and ineffectual deal. The limits for excessive food speculation are too lax. They allow continues profit making at the expense of the poorest and threaten the access to food.
Apart from a few exceptions, conservatives, christian democrats and liberals have not used the European Parliament’s control function for a necessary revision. Thus, these MEPs have just thrown the good agreement on curbing food speculation over board and have simply nodded through the flawed implementation rules as proposed by the Commission. Watering down the limits on food speculation risks to have tough consequences for the people and farmers in developing countries. It will also defeat the confidence of our citizens in the EU’s ability to deliver policy to match its rhetoric. Conservatives, christian democrats and liberals put fuel to the fire of citizens’ frustration about Europe, if they accept ineffective rules, thus ignoring the unparalleled protests of churches and development organisations.
The result of today’s vote also weakens the European Parliament’s position vis-á-vis the European Commission. It has been more than a year since the responsible MEPs wrote to the European Commission to explain that significant improvements were necessary to effectively curb food speculation. The Commission has not sufficiently taken this demand into account. Today, conservatives, christian democrats and liberals have ensured that the Commission’s “impaired hearing” will not have any consequences.”
(1) In order to implement the MiFID II agreement, the European Commission and the European Securities and Market Supervisory Authority (ESMA) have developed detailed rules, called „regulatory technical standards“. These rules for curbing speculation on food stuff („position limits“) still enable national financial regulators to set very high limits and their determination fails to take sufficient account of price volatility. The proposals also contain a very restricted definition of contracts (“OTC contracts”), which can be used for equivalent commodity trades. Thus, the proposed rules create a loophole for circumventing the position limit regime.