In the wake of recent LIBOR and EURIBOR manipulations, the European Commission wants to restore confidence in the integrity of benchmarks and address shortcomings in the determination process and use of benchmarks.
A first step in achieving this aim is a draft regulation containing a number of measures:
- The provision of benchmarks will be subject to prior authorisation
- There will be new rules concerning the data used in the determination of benchmarks and a code of conduct for those contributing data for benchmarks
- Consumers and investors will receive better protection, by measures such as greater transparency of input data
- Critical benchmarks will be supervised by colleges of supervisors, led by the supervisor of the benchmark administrator
The new rules do not apply only to benchmarks for interest rates, such as LIBOR, but also to commodity benchmarks. The proposal is in line with the principles for financial benchmarks recently published by the International Organisation of Securities Commissions (IOSCO).