WASHINGTON (Reuters) - There is little evidence that speculation in commodities has led to high and volatile commodity prices, a global banking group said on Monday in a report to the Group of 20 leading economies.
Tighter regulations on investment in commodities — such as speculative position limits in development in the United States, and a similar crackdown being considered at the G20 — could hurt market liquidity and distort prices, the Institute of International Finance said.
“Regulators have not provided a robust analysis of the impact of proposed measures, such as position limits, on the effective functioning of commodity markets,” the IIF said in its report.
French President Nicolas Sarkozy has blamed speculation for high food prices, and has made tougher regulations a key plank for his G20 presidency.
Meanwhile, the U.S. Commodity Futures Trading Commission could finalize its long-awaited curbs on commodity speculation as early as September 22.
The IIF represents more than 440 banks worldwide, and is the latest in a long line of industry groups to argue that the regulations could do more harm than good.
For its report, an IIF task force reviewed academic literature and “studies by official sector bodies.”
The task force included representatives from companies which have lobbied against the CFTC’s position limits, including Bank of America (BAC.N), Morgan Stanley (MS.N), Barclays Capital (BARC.L), Societe Generale (SOGN.PA), BNP Paribas (BNPP.PA), Standard Chartered Bank (STAN.L), Deutsche Bank (DBKGn.DE), Goldman Sachs (GS.N), State Street (STT.N) and the International Energy Agency.
Reporting by Roberta Rampton; Editing by Alden Bentley