BRUSSELS The European Union's executive will propose powers to cap trading by big investors to control speculation on commodities, the bloc's official in charge of financial reform said on Tuesday.
Speaking in the European Parliament, Michel Barnier said he wanted new rules to tackle speculation in derivatives, which has been blamed for the spiraling cost of grain and other commodities.
"We want to know who is doing what, when they are engaged in speculation," Barnier told lawmakers.
"A bit like the Americans, we are going to make sure you are not having a dominant operator on the market," he said. "We will go along the same lines as the Americans in October. We are going to make proposals for limits."
Barnier will face opposition in pushing this through, however. Although he and his officials write the first draft of European Union laws, EU member countries can prune them back.
A French push to win backing last April for imposing position limits on European traders of commodities ran into British opposition.
Barnier also conceded that price volatility in commodities was not necessarily the result of speculation.
"It's supply and demand; it has to do with that, clearly," he said. "Supply is stagnating. You have floods in some areas, drought in other areas, climate disaster. At the same time, demand is on the increase, and it won't cease to increase."
(Reporting by Huw Jones; writing by John O'Donnell; Editing by Will Waterman)