INTERNATIONAL regulators have ordered watchdogs around the world to clean up financial benchmarks in a co-ordinated effort to stop any repeat of last year’s Libor scandal.
The International Organisation of Securities Commissions (IOSCO) wants increased monitoring of data submission and compilation as well as improved complaints systems.
The regulators also want indices to be updated regularly when the structure of markets changes, for instance when the rates measured are no longer the main rates in use.
IOSCO’s recommendations are not legally binding, but do have influence as the group is comprised of leading figures in the regulatory landscape.
US regulators had called for an end to any index not based on market transactions – some Libor rates were essentially made of guesswork after liquidity dried up in the crisis.
But IOSCO held back, as it may mean scrapping useful benchmarks.
“These principles set out clear and robust standards that will improve their construction and oversight of benchmarks, and form an important step in restoring their credibility,” said Martin Wheatley, head of the UK’s Financial Conduct Authority (FCA). “We look forward to working with international partners to drive up standards.”