A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

Reforming agricultural derivatives markets:
Wishful thinking for 2013?

January 14, 2013


As we begin 2013, New Year’s resolutions abound and so do the good intentions regarding the regulation of financial markets… In January 2013, the United States announced, through the Federal Reserve Board (FED), it wants to act “as soon pas possible” to implement the segment of the financial reform that deals with OTC markets.

Among the changes considered, is the implementation of several provisions of the 2010 Wall Street Reform specifically addressing the control of OTC derivatives, as well as the 2009 G20 recommendation concerning the implementation of clearinghouses, trading platforms and registration requirements for such products. As of now, the progresses are limited to high-level discussions, as the task seems to be difficult.

While they were almost inexistent in the early 1990s, the trade value of derivatives reached close to $639,000 billion in late June 2012 (or 10 percent less than the previous year but 16 percent over the figure in late 2008), for a market value of over $25,000 billion, according to the latest estimate from the Bank for International Settlements (BIS) in November 2012.

For the past twenty years, the erratic and out of control trend for OTC derivatives resulted in the excessive speculation in commodities markets––especially for agricultural commodities––leading to the food price hyper-volatility at the root of the 2007/2008 food crisis.

Initiatives to reform and better oversee OTC markets are not new, and the growing awareness of the danger of such a situation is increasingly becoming clearer in the United States as in Europe, and is the topic of discussions in international arenas.
    - In the United States, the financial regulation of agricultural commodities is better advanced. President Obama’s signing of the Dodd/Frank Wall Street Reform and Consumer Protection Act on July 21, 2010 has significantly strengthened the regulatory framework.

    - In Europe, the regulatory framework is less improved, although we must welcome a number of initiatives, such as the EMIR directive to supervise OTC transactions that was adopted by the European Parliament on March 25, 2012, as well as the January 1, 2011 creation of the European Securities and Markets Authority (ESMA).

    - Discussions addressing the growing financialization of financial markets and the fight against price hyper-volatility represent one of the crucial issues for the G20, and particularly for the G20 Agriculture Ministers Meetings. Yet, concrete actions are expected beyond statements of good intentions, when the global financial architecture becomes the key issue of the G20 under Russian Presidency in 2013.
It has never been more urgent to oversee OTC markets, but statements are not the same as legislative decrees. First and foremost, the process must be pursued at the national, regional and global levels, in order to promote regulated and transparent financial markets, and “homogenous” regulation to prevent detrimental competition, build up public and private reserves to control price fluctuations, or still implement position limits to fight market abuses… These are the measures advocated by momagri through its ten proposals to regulate speculation in agricultural commodity markets1. Let us hope that this New Year 2013 is the year of transparency, cooperation and regulation for the future of agriculture and global food security!

1 “momagri’s ten proposals to regulate speculation in agricultural commodity markets” http://www.momagri.org/UK/points-of-view/momagri-s-ten-proposals-to-regulate-speculation-on-agricultural-commodity-markets_948.html
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Paris, 18 December 2018