The Financial Conduct Authority (FCA) has announced the commencement of regulation for Gold, Silver and Crude, amongst seven additional fixed income financial benchmark. Due to the scandals surrounding the manipulations of these financial instruments, it is inevitable that the FCA launches regulation of more financial benchmarks.
This development will extend the FCA`s initial regulation of the London Interbank Offered Rate, which was introduced since 2013, in order to establish the credibility of FX benchmarks, when it comes to global banking world.
The benchmarks under the FCA regulations will include the following:
- WM/Reuters 4pm London Fix
- ICE Brent index.
- Sterling Overnight Index Average (SONIA) including the Repurchase Overnight Index
- London Gold Fixing.
- The LMBA Silver Price.
- Average (RONIA), which serves as reference rates for overnight index swaps ISDAFix, which happens to the principal global benchmark for swap rates and spreads for interest rate swap transaction.
An industry expert, Philippe Gelis aired his view about the industry development by saying that the FCA’s decision is a necessary and important step to eliminate manipulation inherent in the financial service sector. He made it clear that it is a move towards transparency and that the only way to protect oneself from FX market manipulation is through the access of real-time mid-market exchange rates. Other measures are ensuring that a regular benchmarking process is followed appropriately and access to transparent pricing.