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MADRID, April 16 (Reuters) - Global benchmark interest ratesshould be based on actual transactions rather than estimates,the top global securities regulatory body said on Tuesday, aftera spate of rate-rigging scandals.
The International Organisation of Securities Commissions(IOSCO) also wants more effective whistleblowing mechanisms, acode of conduct for individuals that submit figures forbenchmarks, a minimum retention of records and stronger policingof institutions that compile and are responsible for rates.
Last year UBS paid a fine of $1.5 billion formanipulating Libor and euroyen contracts and Barclays paid $450 million for false fixing of Libor. At least a dozenother banks are under investigation for rate-rigging.
Financial industry benchmarks have come under intensescrutiny since a rigging scandal over Libor - a global benchmarkrate at which banks lend to each other - erupted last year.
National and regionals watchdogs are investigating a widevariety of benchmarks in the wake of the Libor scandal and asimilar row over Euribor - the Euro Interbank Offered Rate.
The top U.S. derivatives regulator is also investigating awidely used benchmark for swaps - ISDAfix.
"To promote market integrity, it is critical that benchmarkinterest rates be anchored in observable transactions andsupported by appropriate governance structures," said GaryGensler, the Chairman of the U.S. Commodity Futures TradingCommission, who is jointly leading IOSCO's task force onbenchmarks with Martin Wheatley, Britain's top UK regulator.
IOSCO said it was opening a consultation period on itsproposals, due to close on May 16, after it received over 50comments earlier this year in a first round of feedback frominvestor associations, brokers, authorities such as the EuropeanCentral Bank and other entities.
