A task force to prevent manipulation of financial market benchmarks such as Libor, Euribor and Tibor and restore confidence in their usage has been formed by IOSCO.
The International Organisation of Securities Commissions (IOSCO) is a global policy forum of securities regulators and standard-setters.
IOSCO members regulate more than 95 per cent of the world’s securities markets in 115 jurisdictions. The IOSCO board comprises 32 securities regulators, including SEBI.
The move comes in the wake of attempted manipulation and related enforcement actions involving Libor (London Inter-bank Offered rate), Euribor (Euro Inter-Bank Offered rate) and Tibor (Tokyo Inter-Bank Offered rate).
These benchmarks are used in pricing financial instruments. Doubts about the integrity and accuracy of benchmarks will undermine market confidence, distort the real economy, and potentially cause losses to investors and market participants, said IOSCO.
The task force’s mandate is to identify benchmark-related issues across securities and derivatives, and other financial sectors. They are expected to define the types of benchmarks that are relevant to financial markets.
The task force also has to identify the relevant policy issues so that appropriate regulatory oversight of the benchmarking process is exercised.
They have to ensure robust processes and procedures for benchmark calculation and construct governance structures to address conflict of interests in the benchmark-setting process.
Finally, the task force has to develop global policy guidance and principles.
It will aim at producing a consultation report towards the end of 2012 or early 2013.