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On 5 October 2012, the Board of the International Organization of Securities Commissions published its final report on Principles for Oil Price Reporting Agencies (PRA Principles), which set out principles intended to enhance the reliability of oil price assessments that are referenced in derivative contracts subject to regulation by IOSCO members. These principles were prepared in response to the G20 Leaders’ request in November 2011 in relation to PRAs, that IOSCO, in collaboration with the IEF, the IEA and OPEC, [to] prepare recommendations to improve their functioning and oversight… and followed by the G20 Leaders’ Los Cabos Declaration.
The PRA Principles specify implementation within one year of publication, i.e., by October 2013, and IOSCO has committed to a review of implementation after eighteen months of publication. Additionally, as stated by IOSCO and reiterated by the G20, IOSCO will consider whether there would be any scope for future modification of the PRA Principles and closer alignment with the IOSCO Principles for Financial Benchmarks.
In this regard, IOSCO invites comment from interested parties on the following questions:
- What changes have interested parties seen from the PRAs as they have implemented the Principles in the oil markets? Is there sufficient transparency regarding the changes made?
- How has behaviour by participants in the oil market changed over the last year, if at all, in the context of the greater focus on benchmarks and the perceived associated risks?
- What further enhancements, if any, should be made to the PRA Principles to improve the reliability of price assessments in the oil market? If they were to be made applicable to other commodity markets what other changes should be made?
The feedback we receive from interested parties will inform our report next year to the G20 and will be considered as public documents. Responses should be provided in writing to alp@iosco.org and Raihana.Braimah@fca.org.uk by 24th January 2014.
