•  
• Tweet
•  
•        Print
•  
•         Track Keywords
•  
• 

By Beverly Chandler, Opalesque London:

The London headquartered Futures and Options Association is the principal European association for the futures and options industry, representing its interests in the public and regulatory domain. It has published a report on the impact of speculative trading on commodity prices.

Entitled 'The impact of speculative trading in commodity markets - a review of the evidence’, the report was compiled by the economic research group FTI Consulting. It constitutes a literature review of the evidence on market speculation and an investigation into the underlying arguments for and against financial participation in commodity markets.

The report finds that the issue of what drives commodity prices and whether their price volatility is excessive has always been of interest to policy makers. A particular feature of futures markets is the balance between "real"economic factors that affect supply and demand and "financial" factors, which act separately of any physical trades taking place and which some observers claim distort prices in the "wrong" way.

The report found that it is very difficult to define speculation and isolate data that proves prices movements derive from speculative activity. It also notes that the debate over the role and impact of speculation has become more intense in recent years as the prices of many commodities have both increased sharply and at times have become very volatile. This is especially true in the ......................

To view our full article Click here