DAVOS, Switzerland French President Nicolas Sarkozy said on Thursday that regulation was needed to rein in excess speculation and volatility in world prices for key commodities.
Sarkozy, who holds the chair of both the G20 global economic forum and the Group of Eight major industrialized economies, told the World Economic Forum in Davos that speculation and poverty fed off each other.
Noting recent extreme swings in oil, grain and other commodity prices, Sarkozy said regulators needed to step in.
"Regulation. Not an excess ... but regulation," he said. "We should put in that transparency. Let those who buy big quantities of commodities commit to putting on deposit part of the financing for those commodities."
The French leader outlined proposals earlier this week for tighter regulation of commodities derivatives trading with greater information-sharing on stocks held and measures to anticipate and prevent food security crises.
Before the Davos audience of CEOs and bankers, Sarkozy asked whether it was right that a cocoa speculator could acquire in a single transaction an amount equal to 15 percent of the world market "without paying one cent of the (physical) quantity of cocoa and resell it without even having paid for it".
"Is that the market?" he asked. "Is that normal?"
Sarkozy said grain prices had been driven up rapidly by speculators in a few weeks after summer fires forced exporters Russia and Ukraine to halt sales abroad.
It was not logical, he added, that the financial industry saw the need for regulation of some financial derivatives but not those from commodities.
(Reporting by Michael Stott, editing by Mike Peacock)