Denis Naughten (Roscommon-South Leitrim, Independent)
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59. To ask the Minister for Finance if he will provide an update on the tripartite talks taking place at EU level to regulate food securities trading on the stock market; and if he will make a statement on the matter. [41302/13]

Michael Noonan (Limerick City, Fine Gael)
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Proposals to regulate food securities at an EU level form part of the current MiFID II and MiFIR proposals which aim to make financial markets more efficient, resilient and transparent, and to strengthen the protection of investors. The Irish Presidency achieved a Council General Approach on this file which has enabled the Lithuanian Presidency to commence the next stage of the legislative process, which is the engagement via Trilogues with the European Parliament and Commission on this file. The Tripartite discussions in relation to this issue are at an early stage and no agreement has been finalised thus far. This topic is scheduled for further Trilogue discussions in October. It is expected at this stage that agreement on commodities will form part of the final MiFID II package.

This file, along with the European Market Infrastructure Regulation (EMIR), seeks to protect against excessive financial speculation in the food and other commodity derivative markets. The Regulation of derivative trading in the EU has been actively discussed within the EU since September 2010 when the Commission published its proposal for the European Market Infrastructure Regulation (EMIR) to regulate this market in the context of over-the-counter (OTC) trades. The EMIR Regulation, which entered into force on 16 August 2012, implements reforms to derivatives trading, making it safer and more efficient. These reforms include obligations to clear and report derivatives and it also imposes obligations on non-financial firms who use derivatives.

Under the current MiFID II proposals, the level of exemptions available has been reduced and more products will be defined as derivative financial instruments, when compared with MiFID I and will therefore fall within the scope of MiFID II and other financial legislation such as Market Abuse. MiFID II also contains important provisions relating to position management, position limits and product intervention. These provisions are in respect of all financial instruments, including commodity derivatives, and have the purpose of providing regulators with tools to avoid excessive speculation in financial instruments, including commodity derivatives. The Council is proposing that competent authorities will be obligated to establish and apply position limits on the size of a position in a commodity derivative which a person can have over a specified period of time.

Furthermore, competent authorities will have product intervention powers whereby they may prohibit or restrict trading of financial instruments or prohibit or restrict investment activities when there is a threat to the orderly functioning and integrity of financial markets or commodity markets. The European Securities and Markets Authority (ESMA) will have contingency and coordination powers in position management and product intervention to ensure consistent application across all Member States. In the exercise of its powers, ESMA will also have to consult public bodies competent for the oversight, administration and regulation of physical agricultural markets.

EMIR and MiFID II combined are expected to result in a tighter regime for all derivatives, including food securities, whether traded OTC or through exchanges. The measures are intended to keep pace with trends in derivatives trading, in line with G20 commitments made at the 2009 Pittsburgh summit.

We will continue to monitor developments on this file throughout the legislative process.