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Comment: Time to reform deficient market structures

 |  April 11, 2016

Posted by Financial Times

Comment: Time to reform deficient market structures

Rosa M. Abrantes-Metz (Managing Director, Global Economics Group)

Regulators around the world have been investigating the manipulation of financial benchmarks for years now. While they will continue, we should also ask what can be done to deter and detech such conduct.

It all started with Libor in 2008, followed by investigations into the rigging in foreign exchange, gold, silver, and swaps, among others. Wether manipulation of a financial benchmark, rate or price will occur depends on wether someone is willing and able to in effect move prices.

The question of willingness is generally outside the control of authorities; it is just human nature. Where authorities and benchmark administrators can, however, influence the likelihood of manipulation and collusion is in the design and oversight of organisational structures, which reduce the possibilities for abuse.