A commission appointed by the Group of 20 nations called for stricter regulation of price-reporting agencies to prevent the manipulation of oil markets.
Price-reporting companies are at risk from oil prices being manipulated and should have greater regulation of their complaints process and the appointment of board members, the International Organization of Securities Commissions said in the consultation report published today.
“There is a risk that a price-reporting agency’s benchmark price can be manipulated by the submission of false prices or by over- or understating the volume transacted,” the report said.
The G-20 appointed IOSCO in November last year to look into the role played by oil price reporting agencies, including Platts, the energy and pricing unit of McGraw-Hill Cos. and Argus Media Ltd., in the functioning of oil markets, their methods of operation and governance and options for future oversight.
The global credit freeze and record oil prices of 2008 prompted regulators around the world to make financial markets more open and secure, in part by forcing more derivatives trading onto exchanges. Brent crude futures are up 14.9 percent this year and climbed to a nine-month high of $125.55 a barrel on Feb. 24.
‘Highly Structured Process’
“Argus has already contributed to a G-20 mandated study of independent price reporting organizations and we are happy to continue to provide information and work with regulators and the industry,” Argus Media chairman and chief executive Adrian Binks said in an e-mailed statement.
“The oil price reporting process which we have employed for nearly 20 years is a highly structured, transparent process,” Kathleen Tanzy, a spokeswoman for Platts based in New York, said in an e-mailed statement. The company plans to participate in the consultation process and submit comments to IOSCO, she said.
Madrid-based IOSCO brings together national market regulators from more than 100 countries to coordinate rules and share information.
The closing date for responses to the consultation report is March 28. A final report will be submitted to the G-20 Finance Ministers in June.
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