LSE has drawn from its experience in index construction to respond to the Commission’s consultation on a framework for regulating indices serving as benchmarks in financial contracts. According to LSE, the key principles of index production are effective governance, clear methodology, transparency and regulatory oversight. In the case of financial instruments that reference an index, LSE notes that the appropriate area for regulation will normally be the actual instrument and the conduct of business rules that apply to its distribution. However, it finds it may be appropriate to regulate key indices used as the basis for an exchange traded financial instrument that is subject to exclusive trading and/or clearing in one venue. It proposes to deal with the systemic risk this creates by requiring the granting of non-exclusive licences of such indices, on fair and reasonable terms.