Consultation Paper - Compliance Standards for Index Providers
1. Objective
To solicit the comments / views from market participants on compliance standards for index providers, to enhance greater level of transparency, promoting the reliability of benchmark determinations, addressing benchmark governance and accountability mechanisms, by providing a broad framework for index providers managing / maintaining Indices.
2. Background
2.1. To create an overarching framework of Principles for Benchmarks used in financial markets, the International Organization of Securities Commissions (IOSCO) published a report in July 2013, proposing a framework of standards for financial benchmarks (or indices) based on international best practices. The framework promotes reliability and independence of benchmark administration and addresses governance, quality, transparency and accountability issues. IOSCO report does not expect a one-size-fits-all method of implementation of the framework, nor does it restrict an administrator from adopting its own unique methodologies or adapting the methodologies to changing market conditions. IOSCO adherents are expected to either comply with the IOSCO principles or explain any non-compliance.
2.2. In addition to the principle prescribed by IOSCO, several foreign jurisdictions have articulated their own framework tailored to the requirements in their respective jurisdiction.
2.3. In light of above, it is proposed to prescribe a set of compliance standards for index providers in order to ensure quality and integrity of the indices administered, maintained or calculated by the index providers.
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