Published On: Thu, Feb 26th, 2015

IOSCO Reviews Implementation of Financial Benchmark Principles

The International Organization of Securities Commission (IOSCO) today published the Review of the Implementation of IOSCO’s Principles for Financial Benchmarks.

The report sets out the findings of IOSCO´s review of the implementation of its Principles for Financial Benchmarks (Principles) by a sample of administrators of financial benchmarks across a range of geographical areas and asset classes. It was prepared by a Review Team, constituting members of the IOSCO Board-level Task Force on Financial Market Benchmarks.

Martin Wheatley, chief executive,  FCA

Martin Wheatley, chief executive, FCA

The review indicated that there has been a significant market reaction to the publication of the Principles, with widespread efforts being made to implement the Principles by the majority of the administrators surveyed. The responses received from administrators also show that the benchmarks industry is in a state of change, as seen from the reported levels of administrators continuing to work towards compliance with the Principles as well as examples of benchmarks being transitioned to new methodologies and administrators. The report notes that further steps may need to be taken by IOSCO in the future; however it is too early to determine what those steps should be.

The Chairman of the IOSCO Board-level Task Force and Chief Executive of the UK Financial Conduct Authority Martin Wheatley said: “Benchmark administrators have taken significant steps to implement the principles across their business, however there is more to do to ensure standards are raised across the market. The principles play a vital role in this, and I welcome the public confirmations of compliance made by administrators to date.”

The Principles were published in July 2013 with the aim of creating an overarching framework of principles for benchmarks used in financial markets, covering governance and accountability, as well as the quality and transparency of benchmark design and methodologies. In the 2013 report, IOSCO stated its intention to review within an 18-month period the extent to which the Principles have been implemented by obtaining the input of stakeholders, market authorities and, as appropriate, administrators.

The review considered information which had been published by the administrators as well as their responses to a questionnaire. This information was used to chart the extent to which the Principles have been implemented by administrators across different asset classes and geographies, allowing for comparisons based on these characteristics. The report provides an overview of the reported level of implementation of the Principles, including any stated application by administrators of the concept of proportionality. The review was intended to provide high level information about the extent of the voluntary market adoption of the Principles, with a view to understanding what administrators have done and what remains to be done, to implement the Principles.

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