Denis Naughten (Roscommon-Galway, Independent)
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246. 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. [30320/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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The regulation of commodity derivative markets, including commodity futures markets, predominantly falls under the EU Markets in Financial Instruments Directive (MiFID II). MiFID II was transposed into Irish law via Statutory Instrument 375 of 2017.

MiFID II established a position limit and position management regime for all commodity derivative contracts traded on trading venues and economically equivalent over-the-counter contracts. Position limits set a ceiling for the number of shares or derivative contracts that a trader, or any affiliated group of traders and investors may own, so as to prevent market abuse and support orderly pricing and settlement conditions.

MiFID II also establishes position reporting obligations to enable monitoring of compliance with the position limit regime and mandates the publication of weekly reports by the European Securities and Markets Authority (ESMA) detailing aggregate positions held by different categories of market participants. 

Amendments were made to the MiFID position limit regime under the EU Capital Markets Recovery Package that was agreed in December 2020 and published in the Official Journal of the EU in February 2021. The changes were made to make the regime more efficient and to help develop euro denominated commodity markets. Commodity derivatives deemed to be critical or significant as well as agricultural derivatives will remain subject to the position limit regime. 

The MiFID regulations concerning commodity derivatives is supported by a suite of other financial services regulation. The European Markets Infrastructure Regulation (EMIR) introduces central clearing, risk mitigation and reporting requirements for over-the-counter commodity and other derivatives in order to make these markets safer and more transparent. The EU Markets Abuse Regulation (MAR) also increases the regulation of commodity derivative markets by, among other things, extending the regime’s scope to cover certain related OTC traded instruments which can have an effect on the covered underlying market including inside information for spot commodity contracts within the definition of 'inside information' and extending the market manipulation offence to include, in some circumstances, spot commodities. The EU Benchmarks Regulation further increases the regulation of commodity derivatives by providing a framework for the regulation of commodity benchmarks and their administrators.  

The totality of financial services regulation of commodity derivative markets, including commodity futures markets, represents a comprehensive set of regulations designed to ensure the proper functioning and integrity of these markets as well as addressing specific concerns regarding the potential impacts of commodity derivative markets on underlying commodity markets.

Finally, I would also note that the EU Commission, the various EU supervisory and regulatory intitutions along with the EU member States regularly consider the overall framework that operates in the EU in this respect.