Write a response to the following description:

Benchmarks-should they still be relevant in this day and age? What is a benchmark exactly? The European Commission gave this definition in a statement issued May, 2015; “a benchmark is an index or indicator calculated from a representative set of data or information that is used to price a financial instrument or financial contract, or to measure the performance of an investment fund.”

In today’s markets, the G20 tried to set a standard for benchmarks to ensure more reliable regulation. Because the market participants are global and benchmarks are so varied, it was considered difficult to propose regulations to fit every situation. However, after the European Commission met in 2015, an agreement was reached to begin negotiations to mandate regulation of financial benchmarks. If the proposals from this meeting are adopted, the integrity and accuracy of benchmarks would be measurable and regulated. These proposals are in line with the proposals which the Iosco endorsed in July, 2013.

It appears to me that benchmarks are here to stay, but regulation is definitely needed. However, to think that these regulations will eliminate current-use benchmarks is naïve. Benchmarks appear to be good for businesses globally and though they have been in use for such a long time, it would be almost impossible to eliminate them completely. I believe the Iosco principles are a good starting point toward regulating financial benchmarks, and yet it seems that true regulation will be a long time coming.

Answer rating: 100% (QA)

Benchmarking is an activity that has greatly improved the performance of many activiti... View the full answer