Denis Naughten (Roscommon-South Leitrim, Independent)
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92. To ask the Minister for Finance the steps he and his European Union colleagues are taking to ensure better regulation of commodity future markets; and if he will make a statement on the matter. [43357/15]

Michael Noonan (Limerick City, Fine Gael)
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In recent years and in response to G20 commitments on commodity derivative trading, the European Commission introduced a number of legislative measures aimed at improving the regulation, functioning and transparency of financial and commodity markets to address excessive commodity price volatility.

The Markets in Financial Instruments Directive (MiFID 2) and Regulation (MiFIR) forms the lynchpin of these measures and are designed to improve both oversight and transparency of commodity derivative markets. Agreed in 2014 and with an entry into application date of 3 January 2017, MiFID 2 will:

- Reduce the level of exemptions available, in comparison to MiFID 1, thus meaning that more financial products will be defined as derivative financial instruments and will therefore fall within the scope of MiFID II and other financial legislation such as Market Abuse.

- The number of exemptions available to entities trading commodity derivatives has been reduced which means meaning that certain entities controlling futures trading will require authorisation once MIFID 2 is fully implemented and hence will be subject to supervision by National Competent Authorities.

- MiFID 2 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.

Commodity futures are required to be cleared which improves the stability of commodity futures markets. Separately, under the European Markets Infrastructure Regulation (EU 648/2012), the Central Bank has available to it data on transactions and positions of non-financial as well as financial counterparties engaged in commodities future markets, data which is held in various trade repositories.

The MiFID II proposals complement initiatives taken in other financial services files such as Market Abuse Regulation and Benchmarks, and together they are are expected to result in a more robust regime for all commodity derivative markets, including food securities, whether traded OTC or through exchanges. This new legislative environment will be much more prescriptive than the current arrangements and will serve to prevent market abuse and to support orderly pricing in commodity derivatives and related commodity markets.