Relying on the belief that greater regulatory strictures will help prevent future benchmark rigging malfeasance, Thomson Reuters recently announced that it will set up a benchmark index of its own.
Appropriately called Thomson Reuters Benchmark Services, the tool that, among others things, judges the quality of investments, is being implemented to help coordinate compliance management factors with those of the International Organization of Securities Commissions.
“Thomson Reuters supports the financial industry in multiple ways to improve transparency in both liquid and illiquid markets,” said John Cooley, global head of indices and reference rates at one of the world’s largest news and information companies. “Over the past 18 months, we have been working closely with global regulators, authorities and agencies to ensure that as an industry we collectively enhance and re-establish trust in key benchmarks and continue to support the vital role they play in financial markets.”
He added that the company’s impressive benchmark portfolio gives it the authority it needs to facilitate data management and data governance best practices.
Cooley also stated that the establishment of this most recent benchmark is warranted, given the amount of attention and awareness that’s resulted since the London Interbank Offered Rate scandal.
“Expectations have been rising, and continue to rise, around best practices so the market can have confidence in benchmarks,” he said.
EU won’t vote until May
Meanwhile, the European Parliament is getting ready to vote on new regulations that would make it harder to manipulate market benchmarks. However, Sharon Bowles, chair of the parliament’s economic affairs committee, told Reuters that legislators won’t cast their votes until May at the earliest. She said that because lawmakers couldn’t come to a mutual accord on the specifics of the benchmarks, they’ve ultimately decided to hand off the vote to the next parliament, which will be installed in May when elections take place.
Adrian Binks, chairman and CEO of Argus Media, added that while this postponement may come as frustrating for financial firms, it’s ultimately a good thing, mainly because legislators will have more time to adjust the details of the benchmark which could adversely affect certain business sectors, such as energy and commodities.
Going forward as the vote moves closer, the European Commission needs to be certain that they remember to distinguish between financial markets and physical markets, as they aren’t the same, Binks told Reuters.