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Derivatives (including commodity derivatives), Our publications

RightingFinance makes proposals to prevent bank-driven food speculation

Recently, the Commodity Futures Trading Commission (CFTC) called for comments on a new rule to establish position limits on commodity derivatives contracts. Position limits are one of the strongest tools regulators can use to prevent price and supply manipulation by a few traders, and prevent price distortion that resulted in the excessive speculation by financial entities in commodities such as food and minerals. It is because of this that when the CFTC was mandated by the US financial reform legislation passed in 2010 (Dodd-Frank Act) to establish position limits, the financial industry challenged the position limits in courts. A judicial decision in favor of the industry forced the CFTC to re-issue the rule, on which it is now seeking comments.

In a submission responding to the call for comments, RightingFinance explained its concern with the negative human rights impacts of speculative price movements of commodities, and called on the CFTC to face Wall Street interests that want position limits so loose that rampant speculation can remain business as usual.

As stated the UN Special Rapporteur on the Right to Food the underlying speculation-based causes of price spikes need to be addressed in order to enable countries to fulfill their basic obligations regarding the right to food, RightingFinance recalled.

Speculative-driven increases in commodity prices have also led to growing interest by investors in large tracts of land which put pressure on limited arable land, and oftentimes by financial firms that have no productive purpose in sight for it. Such large land acquisitions have been associated to a variety of human rights impacts, from those of political participation by people opposing the purchases to the rights to work and to livelihoods by communities that depend on the land.

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March 2017
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