See this article from the Wall Street Journal on CTRM Center which discusses the CFTC’s action against Kraft Food Group Inc. and Mondolez Global LLC. There are allegations of cross market manipulation as well as breaches in position limits. The CFTC announcement can be found here.

In Europe, we have several initiatives looking at abuse in energy and commodities. REMIT covers the gas and power markets, with cross market manipulation explicitly prohibited.

The position limits regime which is part of MiFID II will cover wheat and other agricultural commodity derivatives. In addition, the Market Abuse Regulation (MAR) and MAD II will introduce new anti abuse measures to derivatives markets.

Cases like this will strengthen the legislator’s hand in arguing that more regulation of the commodities markets is required in order to stamp out abuse. There have been many arguments protesting  the potential impact of MiFID II on the commodities markets, although these primarily focus on the loss of exemptions. Never the less, from a perception viewpoint, such cases will support the general public view that trading activity in commodities”should be regulated”.

It also strengthens the case for a more global set of rules covering commodities markets. This may well be challenging, but the G20 push for derivatives regulation shows that it is also possible with the right political will.