The drive for regulation could be motivated by political concerns and risks ignoring the underlying factors that drive commodity prices, according to the chief executive of the London Metal Exchange.
Martin Abbott also defended the much-maligned practice of short selling, where market participants seek to profit from falling prices.
He told Parliament's Treasury Select Committee: "There is a sense that high prices of certain commodities, particularly for fuel, for agricultural commodities, is de facto a bad thing. Whereas in fact, it may simply be a reflection of reality. If regulation is aiming in fact to control outcomes rather than control the means to which prices are discovered, then it is off-target."
Short selling was essential to commodity markets, he said. "It is not possible for commodity markets or for their participants to function without freely available short selling. It is utterly essential to the commodity markets," he stressed.
Mr Abbott also weighed in on the European Securities and Markets Authority, the pan-European regulator which is due to be in place next year. "We have a concern about the level of UK representation on ESMA, were ESMA, in fact, to become the dominant regulatory body," he said.
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