Explainer: Price surge prompts regulators to peer into commodity hinterland – by Huw Jones and Pratima Desai (Reuters – July 18, 2022)


LONDON, July 18 (Reuters) – Spikes in energy and grain prices following Russia’s invasion of Ukraine in February, coupled with the suspension of nickel trading on the London Metal Exchange in March due to a disorderly market have prompted regulators to take a closer look at the commodities sector.


There are many. A surge in food and energy prices has pushed inflation to the highest levels in decades, piling financial strain on households and political pressure on regulators.

In the case of some commodities, regulators say they do not have information on who holds the large positions that can inflate prices beyond levels implied by supply and demand.

While contracts such as oil or metal futures traded on exchanges are transparent and tracked, regulators have far less insight into related hedging contracts transacted privately or over-the-counter (OTC), often in different countries and involving chains of brokers.

For the rest of this article: https://www.reuters.com/markets/commodities/price-surge-prompts-regulators-peer-into-commodity-hinterland-2022-07-18/