The Board of the International Organization of Securities Commissions (IOSCO) issued guidance today that seeks to increase the consistency and quality of reporting by Benchmark Administrators on their compliance with the IOSCO Principles for Financial Benchmarks, which were published in July 2013.
The Guidance on Statements of Compliance with the IOSCO Principles for Financial Benchmarks sets out reasonable expectations about the level of detail that should be included in these statements. The aim is to enable market authorities, users of benchmarks and other market participants and stakeholders to understand the extent to which an administrator has implemented the Principles.
As the global standard setter for securities market regulation, IOSCO is committed to helping restore confidence in the robustness of benchmarks used in global financial markets. The Principles form an integral part of IOSCO´s efforts to enhance the integrity, the reliability and the oversight of benchmarks. They represent recommended practices for benchmark administrators and other relevant bodies in areas such as governance, benchmark quality, quality of methodology and accountability. They also provide a framework of standards that might be met in a variety of ways depending on the specificities of each benchmark. In particular, the application and implementation of the Principles should be proportional to the size and risks posed by each benchmark and/or administrator and the benchmark-setting process.
Based on the feedback from a survey it conducted in early 2016, IOSCO decided to develop guidance for administrators on statements of compliance, while also seeking greater disclosure from administrators on where and how they had applied a proportional approach.
Edwin Schooling Latter, of the UK Financial Conduct Authority and Chair of the IOSCO Board Level Task Force on Financial Market Benchmarks, said: “We welcome the visible efforts administrators have made to disclose publicly their compliance with the IOSCO Principles. However there is more to be done to establish consistency across the market in the statements of compliance published. This guidance will help administrators describe to market participants how they are applying the Principles to their businesses and so enable users to judge whether or not the benchmarks provided follow international recommended practices and are appropriate to their needs.”