How We’re Reforming Leading World Benchmarks

As we reform some of the world’s most important benchmarks, we implement new systems and technology that enhance transparency and help to protect against manipulation so that each of the benchmarks we administer acts as a trusted economic indicator.

Our benchmark reforms include:

• Establishing Oversight Committees for each benchmark
• Bringing in independent experts to advise the reform process
• Driving transparency in the benchmark setting process with new technology
• Making significant investments in new surveillance tools
• Implementing validation checkpoints to protect data integrity
• Transitioning subjective pricing models to transparent, electronic methods and calculations

Through investing in and applying these reforms, we’ve:

Improved the transparency and effectiveness of ICE LIBOR

• Implemented new benchmark surveillance technology and techniques to improve the LIBOR rate-setting process so market participants can be confident in the information they receive
• Developed new technology for the collection of ICE LIBOR submissions and related transaction data, including real-time validation checks to reduce the risk of manipulation
• Established the LIBOR Oversight Committee, which is responsible for overseeing the benchmark’s code of conduct. The committee includes representatives from the market, industry bodies, benchmark contributors and infrastructure providers, as well as Observers from the Federal Reserve Board in New York, the Swiss National Bank and the Bank of England.

Transformed the LBMA Gold Price and ICE Swap Rate

• Implemented technology to bring transparency to the benchmark setting process and remove opaqueness.
• Moved the LBMA Gold Price away from a telephone-based process to an electronic, physically-settled and tradable auction using ICE’s trading platform, recognized around the world for providing access and increasing trust in the markets
• Given the ability for direct participants and sponsored clients to manage orders in the auction directly from their computers for the first time
• Created a level playing field for the LBMA Gold Price leading to increased confidence and doubled participation and volumes in the auction
• Transitioned ICE Swap Rate from a polled submission model based on price estimates and subjectivity to a methodology based on real, tradable quotes from regulated trading venues, significantly improving the way in which this important swap rate is calculated

DEVELOPED THE ISDA SIMM (STANDARD INITIAL MARGIN MODEL) CROWDSOURCING FACILITY

• Developed a crowdsourcing facility in conjunction with ISDA to achieve independent consensus-driven risk buckets for initial margin on non-centrally cleared derivatives
• Enables market participants to implement ISDA SIMM consistently and to agree the margin that needs to be exchanged