Consequently, FESE distinguishes benchmarks by dividing them into the following three categories:
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benchmarks based on polled rates which are sourced from non-regulated data sources, excluding information indicators (especially in cases where they are prone to a conflict of interest);
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benchmarks based, in whole or in part, on transaction data from OTC markets;
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benchmarks based on transaction data from regulated markets.
FESE believes that it is appropriate that all benchmarks should be brought within the scope of civil and criminal sanctions against manipulation, and their governance, transparency and calculation methodology arrangements should be subject to a set of high level principles which are being devised by IOSCO.
Should policy-makers engage in future discussions on benchmarks and indices and the need to preserve market integrity, FESE believes that these discussions should be in line with the goals of the Commission’s current work on both MiFID/R and MAD/R, and should focus on ensuring independence, and transparency.
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