Background
6.1 The UK is home to some of the largest commodity and commodity derivative markets in the world, and they play a key role in establishing prices globally. Commodities derivatives are regulated under both FSMA and the MiFID II framework, but many substantive elements of the regime are contained within MiFID II. Firms which fall within the commodities regime are required to comply with a number of requirements that are specific to commodity derivatives markets, such as position limits, as well as the transparency and trading requirements that apply to all derivative market participants. Reforms to the latter are discussed in Chapter 5 (Fixed Income and Derivatives Markets).
6.2 The specific regime for commodity derivatives was originally introduced as a response to high price volatility in the physical oil and agriculture markets in the mid-2000s. It was intended to align with the G20's 2011 commitment to give market regulators effective intervention powers to mitigate again
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