As buy-side financial institutions reinforce their data governance policies in order to ensure that something similar to the London Interbank Offered Rate doesn’t affect their company, regulators of benchmarks are being more proactive in order to prevent individuals from rigging key interest rates.
For example, the European Securities and Markets Authority, as well as the European Banking Authority, recently published their conclusions after reviewing the Euribor, more formally known as the Euro Interbank Offered Rate. It noted that while all the recommendations as to how to strengthen the benchmark have yet to be performed, the ones that have demonstrate “significant progress” has been made in strengthening its technical framework.
The original recommendations from the ESMA and EBA came in mid-January of last year after the public lost faith in the Euribor, as an investigation found that it had been tampered with by numerous banking institutions.
Steve Maijoor, ESMA chair, noted that because the Euribor is such a crucial component of the global financial marketplace, the changes suggested are important to implement in order to restore the public’s confidence in the financial sector.
“Beyond the immediate changes recommended by the EBA and ESMA, international cooperation on reforming interbank benchmarks is progressing,” said Maijoor. “Euribor should be ready to respond to these advances.”
Andrea Enria, chair of the EBA, echoed Maijoor’s comments, indicating that in terms of data governance, a great deal of commitment in reforming the benchmark has been evident. She added that she was highly confident the remainder of the changes would be completed in the not-too-distant future.
The EBA and ESMA noted that, specifically, four of the recommendations have been fully implemented. Another six have only partially been enacted.
- Navigating Fixed Income Analytics in a POINTless World
- MAR Update – Regulatory Oversight is on the Rise
- Ensuring Regulatory Compliance Includes Detecting Questionable Order Activity
- Ask the Expert: FIGI I.D. Mapping Across Multiple Asset Classes
- More Time Required Before Phasing Out of Key Reference Rates