The NFU’s call to avoid unintended consequences in regulating agricultural markets has been taken on board in the latest update on a major financial EU directive threatening farmers’ ability to use the futures market.
The Markets in Financial Instruments Directive II (MiFID II) is due to come into force in January 2017, and NFU lobbying action over the past few years has sought a number of key exemptions in the standards drafted by the European Securities and Markets Authority (ESMA).
In its original state, the directive required that farmers using forward contracts and futures were to be regulated as financial operators, and could only seek exemptions through onerous and expensive routes to prove they should not be regulated in a similar way to banks and other financial institutions.
The NFU says that now clarification is available to UK regulators it is essential that farmers using the futures market are making their MPs aware of the economic and bureaucratic burden this directive could bring for farmers.
NFU chief combinable crops adviser Guy Gagen led the NFU’s lobbying on this issue in the UK and EU.
“I’m very pleased to see ESMA incorporate important points from comprehensive NFU responses to this new legislation and the challenges it has brought,” he said.
“While the agricultura lindustry represents a relatively small percentage of the trade on futures markets, MiFID II has the potential to undermine the way farmers trade their grain. The NFU influencing this guidance affecting all producers and processors of wide range of agricultural and industrial commodities across the EU economy is a big win.
“We are still some way off seeing how the FCA will implement this directive in the UK, so we have time for farmers to talk to their local MP about why it needs to be done with as little disruption to producers as possible. When this issue comes up in government discussions, we need the right people to be aware of the impact on the ground.