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<p>The Government believes effective commodities markets regulation is key to ensure
economic stability. This is the lesson we have learned from the 2000s food and financial
crises and the Government remains committed to the G20 recommendations that sought
to uphold that.</p><p> </p><p>Through the Financial Services and Markets Bill, the
Government is making changes to the regime which we have inherited from the EU, which
is overly complicated and poorly designed. For example, to ensure that the regime
is calibrated effectively, the Bill delegates the setting of position limits from
the Financial Conduct Authority (FCA) to trading venues, who are well placed to ensure
that it only applies to contracts that are subject to high volatility. The FCA will
also retain its ability to directly intervene if need be. This will ensure that speculation
in agricultural and physically settled contracts such as oil and gas does not lead
to economic harm.</p><p> </p><p>The Government is also using the Financial Services
and Markets Bill to improve the transparency regime for commodity derivatives. The
regime that we have inherited from the EU was designed for equity markets and as such
does not take into account the inherent differences between these two markets. The
FCA will be given responsibility for creating a more tailored regime that improves
transparency and recognises the diverse nature of our markets.</p>
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