The European Union has voted through rules to limit the ability of banks and hedge funds to bet on food prices. Arlene McCarthy , a Labour MEP for the north-west, said the new rules, known as Mifid, would "curb speculation and help decrease price volatility and inflation" which had a "devastating impact on poor and food dependent countries". McCarthy said the rules would establish "an effective system of limits on the positions taken by financial players to curb speculation and help decrease price volatility and inflation of staple foods and other commodities". The new rules, which have to be ratified by individual nation states, come after a series of high profile stories detailing the millions banks, hedge funds and commodity traders have made from betting on the price of food. The United Nations estimates that annual financial trading in food commodities has risen from $65bn (pounds 41bn) to $126bn in the past five years, which has helped push the price of some basic staples to a 30-year high. At the height of a severe drought in 2011, the head of food trading at commodity trader Glencore told investors that the drought was good for Glencore because it could exploit soaring prices. Michel Barnier , the European commissioner responsible for financial services who led two years of negotiations ahead of the vote late on Tuesday, has described companies' profiteering from food trading as outrageous. He said: "[The new rules] are a key step towards establishing a safer, more open and more responsible financial system and restoring investor confidence." The rules will limit the size of positions that traders can hold in a broad range of commodities, including food staples. The limits will be set nationally, rather than at a European level. Rupert Neate
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