THE AUTHORITIES RECOGNISED THAT:

• there have been significant developments affecting international commodity markets, such as the liberalisation of trade policies and capital flows, an increase in privatisation initiatives, and the diminution of price supports;
• these developments have implications which include the creation of new demands for the international use of commodity futures contracts as a means of managing price risk;
• commodity contracts which are based on an underlying commodity, and which settle in cash or by physical delivery, have characteristics different from highly liquid financial futures contracts; this is particularly the case when supply is limited, subject to relatively high production, transportation, storage and delivery costs, subject to seasonal shortages, or subject to long production lead times;
• the potential for market integrity concerns is compounded by the increasingly global nature of commodity pricing, production, storage and delivery facilities and the diverse regulatory treatment of these facilities;
• market authorities¹ must take steps to address the international supervisory implications of the above developments, including their implications for market integrity, market surveillance, supervisory cooperation, international systemic risk and for confidence in the markets.

THE AUTHORITIES further recognised the substantial progress that has been achieved in other international fore with respect to market supervision and cooperation and the relevance of such developments to this meeting's agenda. The Authorities noted, however, that no forum to date has addressed the particular concerns raised by markets whose underlying product is a physical commodity.

THE AUTHORITIES addressed on a multilateral basis the special concerns raised by commodity futures markets and identified where further work could enhance their ability to supervise the markets subject to their respective jurisdiction, in particular in the following areas:

• Contract specifications
• Market surveillance; and
• Information sharing and cooperation.

I. THE AUTHORITIES REACHED THE FOLLOWING POINTS OF CONSENSUS

II. THE AUTHORITIES AGREED TO PROMOTE

III. THE AUTHORITIES RECOMMENDED THAT FURTHER WORK SHOULD BE UNDERTAKEN TO CONSIDER

Annex 1
Participants in the London Meeting