On 5 September 2012, the EU Commission published a consultation document exploring a possible framework for the regulation of the production and use of indices serving as benchmarks in financial and other contracts so as to identify the key issues and shortcomings in the production and use of benchmarks and to assess the need for any changes to the legal framework so as to ensure the future integrity of benchmarks. The consultation looks at:

  • General information on indices and benchmarks, including their definition, the persons that produce indices and the methodologies that they use, and the purposes for which indices are used.
  • Governance and transparency arrangements concerning the calculation of benchmarks, including the use of data and the persons contributing the data.
  • The purposes and uses of benchmarks.
  • The role of private and public bodies in providing benchmarks.
  • The potential impact of the regulation of benchmarks, including the need for transitional arrangements and the international issues to be considered for any new framework for indices and benchmarks.

The consultation follows allegations of manipulation of the London Interbank Offered Rate (LIBOR) and Euro Interbank Offered Rate (EURIBOR) benchmarks. As detailed in the August Front Page, the EU Commission published amendments to the MAD II legislative proposals to bring the manipulation of benchmarks within the scope of MAD II and to ensure that the manipulation of markets becomes a criminal offence.