IOSCO: Principles for oil price reporting agencies

This final report sets out principles intended to enhance the reliability of oil price assessments that are referenced in derivative contracts subject to regulation by IOSCO members. Among the measures expected of price reporting agencies: ensuring methodologies provide sufficient information to explain how assessments are produced, including how changes to a methodology will be communicated to stakeholders; the adoption of internal quality control procedures applicable to the submission and evaluation of market data used in an assessment; the adoption of conflict of interest policies aimed at reducing the possibility of any undue influence in the assessment process and the establishment of audit trails and complaints processes to include recourse to an independent third party. In addition, the principles ask for a commitment to make available to market authorities audit trails and other related documentation intended to facilitate determination of the reliability of assessments or to investigate and prosecute illegal conduct affecting a derivatives market. The principles recognise that there is no requirement on any physical market oil participant to submit transaction data to price reporting agencies. IOSCO recommends that market authorities consider whether to prohibit trading in any commodity derivatives contract that references a price reporting agency-assessed price unless that assessment follows the principles. IOSCO proposes, in collaboration with the IEA, IEF and OPEC, to evaluate the implementation of the principles after 18 months. Should they conclude that implementation has been ineffective, further recommendations may be developed,