Financial indices and benchmark settings: The road ahead for Europe

Published in: 

Greater transparency and better governance for all the actors involved in the supply chain of benchmarks: that is what regulators and market participants expect from the forthcoming Commission proposal on benchmarks prices and indexes. Against a general consensus regarding the necessity of a response to the recent scandals (e.g. LIBOR), this event organized by ECMI discussed the implications that the legislative action will have on a wide range of stakeholders with key regulators (European Commission and ESMA) and stakeholders.

Three issues emerged as central to this debate. First, panellists acknowledged the heterogeneity of benchmarks and thus a ‘one size fits all’ approach may not be suitable. Second, the use of judgement in some benchmarks production is a precondition for providing the market with meaningful information. Legislation recognising only transaction-data benchmarks may be ineffective if not counterproductive. Third, the extent to which legislative burden will discourage contributors to participate to benchmarks setting is open question as submitters are also afraid of the potential liabilities of submitting transactions to an entity that does not provide a minimum level of transparency and governance rules.