16 May 2016

Second review of the implementation of IOSCO’s Principles for Financial Benchmarks by administrators of EURIBOR, LIBOR and TIBOR

The 19 Principles were published in July 2013 for implementation by benchmark administrators and submitters to promote the reliability of benchmark determinations. The second review sets out the IOSCO findings into the action taken by administrators to implementing the recommendations of the first review.

The second review found that all three administrators have been proactively engaged in addressing the issues raised by the first review, which had found an important distinction between the progress made on implementing the Principles related to the quality of the benchmark and that on implementing the Principles related to governance, transparency and accountability.

In regard to the Principles on governance, transparency and accountability, the second review found that a majority of the recommendations made by the first review had been implemented by the administrators. The review saw evidence that all the administrators had developed and improved their policies and procedures in a number of areas including conflicts of interest, consultation with stakeholders and internal oversight.

In regard to the Principles related to the quality of the benchmark, the second review found that all three administrators are in the process of conducting work to evolve the three benchmarks to further anchor them in transactions. IOSCO notes that the most part of this work is at the stage of planning and consulting and the level of implementation of the relevant Principles will depend on the outcome of the planned work, rather than the plans themselves. Administrators are encouraged to ensure that the outcomes of their plans are in line with the Principles. Furthermore, implementation of Principles relating to the quality of benchmark should not be seen as a one-off process and Principles such as benchmark design must continue to be responsive to changes in methodology and the market for the underlying interest.

Full report

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