The McGraw-Hill Companies, Inc. : IOSCO Highlights Areas Of Concern in Oil Prices Assessments
06/12/2012| 01:20pm US/Eastern
By Sarah Kent
The International Organization of Securities Commissions Tuesday highlighted concerns over the role of price reporting agencies in the oil market, following a March consultation the agency conducted into the subject.
The group of regulatory bodies said the consultation had raised several areas of concern which it intended to examine further ahead of a final set of recommendations on the oversight of price assessment agencies at the end of the year.
IOSCO's comments shine a light on an obscure part of the oil market that is essentially free from government over-sight, despite helping to establish the price of billions of dollars-worth of oil.
IOSCO outlined numerous concerns over the operation of price reporting agencies, which include publications like Platts and Argus, warning that conditions existed that left oil prices open to manipulation or distortion.
"Likely recommendations may focus on safeguards to prevent or minimize the possibility of such manipulation," IOSCO said.
"It is crucial that their arrangements governing how they operate and how they assess prices provide for sufficient safeguards to ensure the integrity of the price assessment function," IOSCO added.
Volatility in the oil market since the price spike of 2008 raised concerns about the role of these publications and the potential need for closer regulation of their activity, prompting the Group of 20 industrialized and developing economies to request IOSCO investigate their role.
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