Swiss NGO moots commodities watchdog

Plans to tighten regulations on the commodities sector remain controversial Keystone

The non-governmental Berne Declaration group has called for the creation of an independent supervisory authority to oversee the Swiss commodities market. It says it is not good enough to allow the sector to regulate itself.

At the launch of its latest campaign to fight ongoing corruption, inequality and environmental issues in the worldwide commodities sector, the pressure group said an independent regulator would help counter the “resource curse”.

“Switzerland as the world’s most important commodities hub has a political responsibility to act,” Andreas Missbach told a news conference on Monday.

He said 500 million people living in extractive countries rich in commodities could escape poverty if they could be included in the economic benefits.

The proposed body External linkwould regulate the sector with a mixture of due diligence and transparency requirements, including human rights, licences and fair tax practices.

The group reiterated that the world commodities market represents a high reputational risk for Switzerland, the hub for at least 20% of the world’s commodities trading.

In March 2013, the Swiss government published a controversial report on the commodities market. It recognised the importance and risks, but stopped short of drafting separate legislation for the sector.

Instead, the cabinet proposed tightening existing laws, notably on money laundering and shareholder rights. A bill is expected to be submitted to parliament by the end of this year.

Several commodity firms and associations have rejected that proposal, according to the Tages-Anzeiger and Der Bund newspapers.

There are more than 500 commodity trading companies based in Switzerland with about 10,000 employees, notably in Geneva, Zug and Lugano. They include GlencoreXstrata, Trafigura and Vitol, companies with the highest turnover in Switzerland.

Opponents of stricter regulations are concerned that they could turn their backs on Switzerland and settle elsewhere in the world.

Look alike

The NGO published its plan for a commodities supervisory authority in a sophisticated presentation, including a special website and logo with obvious references to the existing financial regulatory authority, FINMA.

The proposed ROHMA – a German acronym for a market supervisory authority for raw materials – is described as a “comprehensive and detailed visionary example” for a proposed mandate.

However, the Berne DeclarationExternal link says FINMA was “not a model” for ROHMA “but just an example”.

The proposed body was inspired by regulations in Britain and the United States, according to Oliver Classen, spokesman for the pressure group.