The International Organization of Securities Commissions has set up a board level task force to identify relevant benchmark-related policy issues and develop global policy guidance and principles for benchmark-related activities of particular relevance to market regulators.
The global standard setter in the securities area created the task force following the Libor scandal and subsequent investigations into attempted manipulation of benchmarks and related enforcement actions. The high level Task Force is composed of members of the IOSCO Board and will be chaired by Martin Wheatley, the managing director of the UK Financial Services Authority (UK FSA), and Gary Gensler, the chairman of the US Commodity Futures Trading Commission (CFTC).
The Task Force will take into account other relevant initiatives by policymakers and stakeholders on benchmarks and serve as the IOSCO representative, together with the chairman of the IOSCO Board, in any other international work initiatives on benchmarking, with a view to avoiding overlap or inconsistencies.
The mandate for the Task Force is to: identify benchmark-related issues across securities and derivatives, and other financial sectors; define the types of benchmarks that are relevant to financial markets; identify the relevant policy issues including: exercising appropriate regulatory oversight of the process of benchmarking, having in place robust processes and procedures for benchmark calculation, and constructing credible governance structures, to address conflict of interests in the benchmark setting process, and ensuring transparency and openness in the benchmarking process; and develop global policy guidance and principles, including those related to effective self regulation.
In developing policy guidance and principles for financial market benchmarks, the Task Force will consider issues related to necessary enforcement powers, information sharing and sanctions regimes in coordination with IOSCOs expert committees
The Task Force will aim to produce a consultation report towards the end of this year or early next year, while its work is expected to require at least until the first quarter of 2013 to complete.Martin Wheatley, managing director of the UK FSA and chief executive designate of the UK Financial Conduct Authority, said: given the global nature and extensive use of benchmarks in a wide range of financial markets and products, it is important to develop internationally consistent principles that ensure their credibility and integrity. In leading this work, the IOSCO Task Force will collaborate with other international bodies to establish a robust set of principles, where appropriate drawing on lessons learned from the Wheatley Review and other supervisory investigations.
(JDC)