Commodity Markets

(asked on 21st December 2022) - View Source

Question to the HM Treasury:

To ask His Majesty's Government what consumer protections are in place for consumers directly or indirectly investing in commodity derivatives.


Answered by
Baroness Penn Portrait
Baroness Penn
This question was answered on 9th January 2023

Most commodity derivatives are regulated by the Financial Conduct Authority (FCA), who have an operational objective to secure appropriate protection for consumers of regulated financial services.

The protections the FCA have in place to protect consumers include requiring firms to provide clients with a general description of the nature and risks of financial instruments, and a warning that people usually lose money when trading speculative instruments with commodities as an underlying asset. These protections apply when consumers participate in the market directly and indirectly and enables them to make investment decisions on an informed basis. Depending on the circumstances, consumers may also be able to qualify for Financial Services Compensation Scheme protection when dealing indirectly with commodity markets.

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