Governments wrestle with commodities speculation

Global regulators are wrestling with how to deal with the role of speculators in commodity markets as food, oil and metals prices rise to levels not seen since spikes in 2008.

French President Nicolas Sarkozy on Monday focused on improving market transparency, and reiterated calls for tougher regulations.

Sarkozy made his comments as he presented his country's priorities for its presidency of the G20 group of leading economies.

Here's how the United States and European Union are looking at the issue:

United States

- Dodd-Frank bank reform law gives regulators the ability to set hard limits across futures and over-the-counter (OTC) derivatives markets.

- Commodity Futures Trading Commission has proposed rules covering 28 agricultural, energy and metals commodities.

- The CFTC's five commissioners must vote again to finalize the rule. Three have said they are skeptical it will work.

- Regulatory arbitrage is a key concern -- Will the limits push traders to markets outside the United States?

- Regulator hopes to have limits in place by early 2012, but first needs to gather more data on OTC positions.

- May move quickly to implement hard limits for spot months of exchange-traded commodities, already enforced by exchanges.

European Union 

- The EU is looking at giving regulators powers to impose position limits in exceptional circumstances, a step removed from the US decision to introduce them.

- Would require traders to disclose their positions.

- European Commission announced blueprint for speculation controls last month as part of a sweeping reform of EU rules known as MiFID (the Markets in Financial Instruments Directive), which govern financial instruments.

- Proposals could become law in 2012. Will need the backing of the European Parliament and powerful EU member states like Germany and France.

- Regulators in Britain, the center of European commodities trading, already oppose position limits.