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Benchmarks Assurance

Establishing trust in Financial Benchmarks

Financial Benchmarks and Indices underpin transactions worth trillions of dollars across the financial services sector and beyond. Following the historical investigations into alleged manipulation of critical benchmarks – such as LIBOR and FX – the administration, contribution, and use of benchmarks and indices are now subject to significant regulatory requirements for global firms operating in the UK and Europe. Global reform of Inter Bank Offered Rates (“IBORs”) is also currently high on the agenda of regulators and firms alike.

Unsurprisingly, stakeholders ranging from financial regulators, executive management, those charged with governance, or external investors, have sought greater degrees of assurance. In particular, if all financial benchmarks are reliable and credible, regulations adhered to and the risk of manipulation reduced.

The need for such assurance has already seen considerable regulatory activity in recent years, with the increasing use of the IOSCO Principles for Financial Benchmarks and separately, Principles for Oil Price Reporting Agencies (collectively, “IOSCO”), along with continued regulatory scrutiny and oversight.

Both EU and UK Benchmark Regulation (EU and UK BMR) have led to a significant and sustained focus on benchmark assurance. Although regional in name, they have a global impact that continues to drive higher standards of regulatory oversight on the administration, contribution and use of financial benchmarks. In addition, with the reform of IBORs, such as LIBOR, well under way, the focus on financial benchmarks, and  assurances that market participants can have on their continued use, will continue to grow.