Companies involved in setting price levels used in the oil market should adopt “robust” controls to protect the reliability of the benchmarks, according to a commission appointed by the Group of 20 nations to investigate possible market manipulation.
The report, which was published today by the International Organization of Securities Commissions, called on price reporting agencies, including Platts, a unit of McGraw-Hill Cos., and Argus Media Ltd., to introduce conflict-of-interest policies, provide audit trails to regulators and establish a formal complaints process.
IOSCO was appointed by the G-20 in November to investigate the role played by the agencies in oil markets. Platts and Argus publish so-called assessments that are used in pricing shipments of crude and refined products such as diesel.
“IOSCO and the other international organizations are proposing a significant step forward to strengthen the robustness and reliability of assessments referenced by oil derivatives contracts,” Masamichi Kono, chairman of the IOSCO Board said, adding that he expected the agencies to adopt the principles globally.
Platts, Argus and ICIS, which is part of Reed Business Information, issued a draft self-regulatory code in April in response to a previous report from IOSCO. Today’s recommendations are “well aligned with Platts’ current practices,” the company said in an e-mailed statement. Argus didn’t immediately respond to an e-mail seeking comment.
Regulators should consider prohibiting trade in any commodity derivatives contract based on an assessment that’s not published in line with its recommendations.
The organization also proposed looking at the changes made by price reporting agencies after 18 months, at which point further recommendations could be developed if the existing ones are deemed ineffective.
Madrid-based IOSCO brings together national market regulators from more than 100 countries, including the U.S. Commodity Futures Trading Commission and the U.K.’s Financial Services Authority, to coordinate rules and share information.
Bloomberg LP, the parent of Bloomberg News, competes with Platts, Argus and ICIS in providing energy markets news and information.