A new vision for agriculture
momagri, movement for a world agricultural organization, is a think tank chaired by Christian Pèes.
It brings together, managers from the agricultural world and important people from external perspectives,
such as health, development, strategy and defense. Its objective is to promote regulation
of agricultural markets by creating new evaluation tools, such as economic models and indicators,
and by drawing up proposals for an agricultural and international food policy.
A look at the news

High frequency trading under the spotlight

November 9, 2015


Algorithmic trading is putting more and more pressure on market stability. Nevertheless, both in the United States and in Europe, there is increasingly more awareness for the need of an ethical and regulatory clampdown.

On 27th October, for the first time, two traders appeared before Federal Justice accused of "high frequency trading", the practice of rapidly buying and selling options using computer algorithms. The case dates back to October 2011 and concerns the Chicago Stock Exchange, i.e. the agricultural commodities market. A massive market order was issued and almost simultaneously cancelled creating panic.

In France, early November, the Financial Markets Authority (AMF) accused one of the leading high frequency trading firms, Virtu, of having manipulated CAC 40 values and is claiming five million euros, as well as claiming 4 million euros from Euronext Paris for misconduct.

The activities of these powerful virtual market operators are the perfect illustration of the growing disconnect between the real economy and the financial sphere. They are all the more harmful that they can spread to agricultural commodities, directly involving the food security of billions of people. 75% to 85% of transactions on wheat do not pass through the Chicago market, but are performed on over-the-counter markets (OTC). The number of agricultural “futures” contracts traded daily on the Chicago Board of Trade (CBoT) has more than tripled since 2000.

The role of European and US regulators is therefore essential in reconnecting finance with the real economy. A goal that, incidentally, Jacques Attali requested be pursued in a recent report submitted to President Francois Hollande. The regulation of high frequency trading, he says, is essential to building confidence in the markets, more equity between operators and narrowing the gap in technology between all actors in the financial sector. One of the many challenges involves reconnecting with the reality of agricultural markets.

Faced with the instability and uncertainty of the current context, the importance of modelling new market realities, which now also concern agricultural markets is all the more urgent, particularly growing speculation on agricultural markets primarily on OTC markets and its impact on price volatility.

Accordingly, the momagri think tank model looks to answer essential questions in order to better understand these realities: Why are prices and farm incomes so unstable and volatile? Or, what impact does trade liberalization have on prices and farm incomes?


Page Header
Paris, 18 December 2018