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European Benchmark Regulation
The European Union has finalized its Benchmarks Regulation, which was published in the Official Journal on June 30, 2016. The new Regulation aims to address conflicts of interest, governance controls and related issues in the benchmark administration process. The substantive provisions applicable to S&P Global Platts are set to become effective January 1, 2018.
S&P Global Platts has actively engaged with European policymakers and regulators on the Benchmarks Regulation since 2012. As a result of the willingness of European policymakers and regulators to engage in a meaningful way with a wide range of stakeholders during the process, the Regulation takes a calibrated approach. Commodity benchmarks, for example, receive specific treatment under a separate Annex II. The substantive provisions of that Annex are consistent with and heavily influenced by the IOSCO PRA Principles.S&P Global Platts has adhered to the IOSCO PRA Principles since 2013. This helps to ensure an internationally-consistent approach which minimizes market disruption while meeting regulatory objectives. As part of this, S&P Global Platts will continue to retain an independent accountancy firm to conduct voluntary reasonable assurance reviews of its alignment to the PRA Principles.Like other legislation in Europe and many other jurisdictions around the world, The Benchmark Regulation (level 1 text) is supplemented by implementing legislation, which further clarifies the requirements of the Regulation. On March 30, 2017, ESMA published its final draft RTS for Level 2 measures, which are currently in the process of being ratified by the European Parliament and European Council.
In the meantime, S&P Global Platts has launched an initiative to prepare for implementation. The Regulation will require Platts to obtain registration or authorization by an EU National Competent Authority (NCA), and Platts is interacting with NCAs to understand their plans to supervise administrators under this new Regulation, and has been actively engaged with the FCA in this regard.
While the Benchmarks Regulation becomes applicable from 1 January 2018, ESMA has provided additional guidance on the transitional provisions contained in the Regulation to allow existing benchmark administrators to provide existing and new benchmarks for use in the European Union during the transitional period (i.e., through 1 January 2020).
Because the EU Benchmarks Regulation will become effective before the completion of negotiations between the UK and EU regarding the UK's exit from the EU, we are considering the impact of Brexit on Platts' implementation of the BMR.
We are confident that S&P Global Platts will be ready to become authorized and to comply with the Regulation. While the exact impact is not entirely clear because the Level 2 rules have not been finalized, we do not expect the Regulation to have a material impact on S&P Global Platts ability to provide its price assessments, news and analytics for the global energy and commodity markets.
For more information, please contact PL_EBMR@spglobal.com
- Regulatory Engagement
- IOSCO & G20
- Methodology
- Market & Media Issues
Regulatory Engagement and Market Issues
Click here for latest IOSCO Assurance Review
S&P Global Platts is the leading global provider of information and benchmark prices for the global commodity and energy markets. Platts has long advocated greater information transparency in oil and other energy commodity markets and has pioneered highly innovative methods of price discovery in such markets.S&P Global Platts constantly engages with policy makers and regulators around the world on issues relating to the benchmarks and global commodity and energy markets.
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IOSCO Principles for Oil Price Reporting Agencies
- Read S&P Global Platts press release: "Independent Assurance Review Confirms Platts Aligns Non-Oil Commodities With IOSCO Principles for Oil Price Reporting Agencies"
As part of its commitment to transparency and integrity, S&P Global Platts has engaged Ernst & Young (EY) to conduct annual independent assurance reviews of its alignment with the IOSCO Principles for Oil Price Reporting Agencies (PRA Principles), which it has done since 2013. To access the latest EY report click here.
The PRA Principles, which set standards for governance and control systems, were introduced by the International Organization of Securities Commissions (IOSCO) and endorsed by the G20 in October 2012.
In its 2013 and 2014 reviews, EY confirmed that S&P Global Platts strong governance structure and operational processes were aligned with IOSCO's PRA Principles in all material respects with regard to its oil benchmarks.
For 2014, the reasonable assurance review included a comprehensive review of Platts' documentation of its processes for price assessments used for oil and also tested the operating effectiveness of these processes in Houston, London and Singapore for the twelve-month period from 1 October 2013 to 30 September 2014.
In 2013, S&P Global Platts announced it would voluntarily apply the IOSCO PRA Principles to its non-oil commodities of power, petrochemicals, metals and agriculture and similarly, conduct annual independent assurance reviews of its alignment to the Principles.
In 2014, like in oil, S&P Global Platts engaged Ernst & Young (EY) to conduct an annual independent assurance review of its non-oil alignment to the Principles. The review was completed in February 2015 and, included a comprehensive review of S&P Global Platts documentation of its processes for price assessments used for power, petrochemicals, metals and agriculture in Houston, London and Singapore as at 28th February 2015.
As with oil, the reasonable assurance review for non-oil demonstrated S&P Global Platts alignment to the PRA Principles.
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IOSCO acknowledges that S&P Global Platts has embraced the Oil PRA Principles
On September 17, 2015 the International Organization of Securities Commissions (IOSCO) announced that the price reporting agencies (PRAs) have made the IOSCO Oil PRA Principles an "integral part" of their price assessment practices and that IOSCO saw no need to continue its annual review of the Principles' implementation.
IOSCO said: "Given the progress that has been evidenced to date, the commitment by the four main PRAs to continue adhering to the PRA Principles, and to undergo independent external assurance reviews, IOSCO, the IEA, IEF and OPEC do not believe that further annual implementation reviews will be necessary at this time". The full report can be found by clicking this link.
S&P Global Platts remains committed to ensuring its price assessment processes continue to fully align with IOSCO's PRA Principles across all commodities and will continue to retain an independent accountancy firm to conduct voluntary reasonable assurance reviews of its alignment to the PRA Principles.
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Methodology Review & Change
- Platts assigns an individual as owner of the entire change process. This individual is accountable for ensuring all processes are correctly followed.
- Platts publishes a proposal in the form of a Subscriber Note and invites feedback over a specified time period. The timelines may vary depending on the nature of the change.
- After feedback is received and collated, Platts considers the information, makes a decision and publishes a Subscriber Note. If Platts decides to proceed with the change, Platts provides additional opportunity for feedback before the change is implemented.
- Any written feedback received by Platts in relation to a methodology consultation that has not been designated as confidential will be made available to users upon request.
- Any written feedback on methodologies that has not been marked as confidential can be made available to users upon request
METHODOLOGY REVIEW
At a minimum, S&P Global Platts reviews all methodologies annually to ensure they continue to reflect the physical markets under assessment. Platts regularly assesses the relevance of methodologies through continuous contact with the market. Feedback on methodologies is always welcomed by Platts. If you have any comments, please contact the Price Group. Please indicate if you wish your comments to remain confidential.
REVIEW & APPROVAL PROCESSPlatts follows a clearly defined process for introducing or making changes to its methodologies. This process is based on full transparency and communication with industry stakeholders aimed at gaining market acceptance for any proposed introduction or changes to methodology.
Once Platts identifies the need for a methodology change:
Platts employs an internal tracking tool for methodology changes which has been developed to ensure controlled internal sign-off at each stage of any change and also provides a clear audit trail.Platts categorizes methodology changes into types. (See table below.) All methodology changes are formally communicated to the market through Subscriber Notes.
Factors, including external factors beyond the control of Platts, may necessitate changes to, or the cessation of, the benchmark. Such factors may include changes in physical market conditions that could materially impact the parameters of an assessment.
Platts does not sponsor, endorse or market any specific financial product or provide investment advice. Users of Platts benchmarks should nevertheless be advised that changes to, or the cessation of, the benchmark may have an impact upon financial instruments that reference the benchmark and users should contact the relevant product provider or fund manager for more information.
Platts is committed to providing advance notice in a clear time frame that gives users sufficient opportunity to analyze and comment on the potential impact of such proposed changes. Time frames vary depending on Platts analysis of the overall circumstances of a particular change.
Methodology changes that materially alter an assessment and require an update to the methodology specification are preceded by extensive bilateral discussions with market stakeholders. Routine changes, such as seasonal quality or pipeline cycle changes, time-rolling assessments, or clarifications, generally do not materially alter an assessment.
Platts may hold open public forums in which material methodology changes and feedback are presented, and at which further feedback may be given.
When a Platts assessment ceases to be relevant to the marketplace, Platts generally will provide at least six months' notice of its intention to discontinue an assessment, although this timeline can be shortened to three months when Platts expects the market impact to be negligible. If an unforeseen event causes a severe disruption in a particular market, the timeline for discontinuing an assessment (sometimes on a temporary basis) may be shortened even further.
On occasion, Platts may need to respond urgently to changing market conditions, perhaps precipitated or warranted by a serious event or market situation. Such changes are also communicated in a Subscriber Note setting out what the issue is and what changes are to be made.
Change typeDescriptionConsult the marketMethodology Change
Changes to specifications, lot sizes, etc.
Industry feedback will be required
Assessment Discontinuation
Platts is considering discontinuing a published assessment
Industry feedback will be sought. Due to market dependency, notice to market must be appropriate
Assessment New
Platts is considering producing a new assessment
Industry feedback will be sought
Assessment New Competitive
Platts is to begin producing a new assessment in line with strategic product launch
To protect strategic advantage, industry feedback will not be sought
Methodology Clarification
Clarifications to an existing methodology that do not involve changes to the assessment
Industry feedback will not be sought
Methodology Clarification with Guide update
Clarifications to an existing methodology that do not involve changes to the assessment but changes to text in the guide
Industry feedback will not be sought
Methodology Seasonal Change
Seasonal changes, shipping cycles, etc.
Industry feedback will not be sought
Methodology emergency
Resolve issues that require immediate resolution
Industry feedback will not be sought
If you wish to comment on a proposed change, please send an email to the address listed in the relevant Subscriber Note and clearly indicate whether you wish your comments to remain confidential.
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MOC Participation Guidelines
Market On Close Acceptance and Review Principles and Procedures Guidelines are available.
DOWNLOAD HERE
-
Market & Media Issues
- Platts Aluminum Midwest Premium Explained
- An Introduction to S&P Global Platts Price Assessment Processes and Methodologies
- An Introduction to S&P Global Platts Market-On-Close Process in Petroleum
- S&P Global Platts Role in the Markets: Video
- Introduction to S&P Global Platts Market-On-Close in Oil: Video
- Important Distinctions Between LIBOR Rate Setting and Oil and Energy Market Price Reporting - November 19, 2014
- Transparency and Integrity in Global Oil Markets Pricing
- S&P Global Platts and Energy Markets
Regulatory Engagement and Market Issues
Click here for latest IOSCO Assurance Review
S&P Global Platts is the leading global provider of information and benchmark prices for the global commodity and energy markets. Platts has long advocated greater information transparency in oil and other energy commodity markets and has pioneered highly innovative methods of price discovery in such markets.S&P Global Platts constantly engages with policy makers and regulators around the world on issues relating to the benchmarks and global commodity and energy markets.
-
Regulatory Engagement
-
Regulatory Engagement
-
European Benchmark Regulation
The European Union has finalized its Benchmarks Regulation, which was published in the Official Journal on June 30, 2016. The new Regulation aims to address conflicts of interest, governance controls and related issues in the benchmark administration process. The substantive provisions applicable to S&P Global Platts are set to become effective January 1, 2018.
S&P Global Platts has actively engaged with European policymakers and regulators on the Benchmarks Regulation since 2012. As a result of the willingness of European policymakers and regulators to engage in a meaningful way with a wide range of stakeholders during the process, the Regulation takes a calibrated approach. Commodity benchmarks, for example, receive specific treatment under a separate Annex II. The substantive provisions of that Annex are consistent with and heavily influenced by the IOSCO PRA Principles.S&P Global Platts has adhered to the IOSCO PRA Principles since 2013. This helps to ensure an internationally-consistent approach which minimizes market disruption while meeting regulatory objectives. As part of this, S&P Global Platts will continue to retain an independent accountancy firm to conduct voluntary reasonable assurance reviews of its alignment to the PRA Principles.Like other legislation in Europe and many other jurisdictions around the world, The Benchmark Regulation (level 1 text) is supplemented by implementing legislation, which further clarifies the requirements of the Regulation. On March 30, 2017, ESMA published its final draft RTS for Level 2 measures, which are currently in the process of being ratified by the European Parliament and European Council.
In the meantime, S&P Global Platts has launched an initiative to prepare for implementation. The Regulation will require Platts to obtain registration or authorization by an EU National Competent Authority (NCA), and Platts is interacting with NCAs to understand their plans to supervise administrators under this new Regulation, and has been actively engaged with the FCA in this regard.
While the Benchmarks Regulation becomes applicable from 1 January 2018, ESMA has provided additional guidance on the transitional provisions contained in the Regulation to allow existing benchmark administrators to provide existing and new benchmarks for use in the European Union during the transitional period (i.e., through 1 January 2020).
Because the EU Benchmarks Regulation will become effective before the completion of negotiations between the UK and EU regarding the UK's exit from the EU, we are considering the impact of Brexit on Platts' implementation of the BMR.
We are confident that S&P Global Platts will be ready to become authorized and to comply with the Regulation. While the exact impact is not entirely clear because the Level 2 rules have not been finalized, we do not expect the Regulation to have a material impact on S&P Global Platts ability to provide its price assessments, news and analytics for the global energy and commodity markets.
For more information, please contact PL_EBMR@spglobal.com
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European Benchmark Regulation
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IOSCO & G20
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IOSCO & G20
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IOSCO Principles for Oil Price Reporting Agencies
- Read S&P Global Platts press release: "Independent Assurance Review Confirms Platts Aligns Non-Oil Commodities With IOSCO Principles for Oil Price Reporting Agencies"
As part of its commitment to transparency and integrity, S&P Global Platts has engaged Ernst & Young (EY) to conduct annual independent assurance reviews of its alignment with the IOSCO Principles for Oil Price Reporting Agencies (PRA Principles), which it has done since 2013. To access the latest EY report click here.
The PRA Principles, which set standards for governance and control systems, were introduced by the International Organization of Securities Commissions (IOSCO) and endorsed by the G20 in October 2012.
In its 2013 and 2014 reviews, EY confirmed that S&P Global Platts strong governance structure and operational processes were aligned with IOSCO's PRA Principles in all material respects with regard to its oil benchmarks.
For 2014, the reasonable assurance review included a comprehensive review of Platts' documentation of its processes for price assessments used for oil and also tested the operating effectiveness of these processes in Houston, London and Singapore for the twelve-month period from 1 October 2013 to 30 September 2014.
In 2013, S&P Global Platts announced it would voluntarily apply the IOSCO PRA Principles to its non-oil commodities of power, petrochemicals, metals and agriculture and similarly, conduct annual independent assurance reviews of its alignment to the Principles.
In 2014, like in oil, S&P Global Platts engaged Ernst & Young (EY) to conduct an annual independent assurance review of its non-oil alignment to the Principles. The review was completed in February 2015 and, included a comprehensive review of S&P Global Platts documentation of its processes for price assessments used for power, petrochemicals, metals and agriculture in Houston, London and Singapore as at 28th February 2015.
As with oil, the reasonable assurance review for non-oil demonstrated S&P Global Platts alignment to the PRA Principles.
-
IOSCO acknowledges that S&P Global Platts has embraced the Oil PRA Principles
On September 17, 2015 the International Organization of Securities Commissions (IOSCO) announced that the price reporting agencies (PRAs) have made the IOSCO Oil PRA Principles an "integral part" of their price assessment practices and that IOSCO saw no need to continue its annual review of the Principles' implementation.
IOSCO said: "Given the progress that has been evidenced to date, the commitment by the four main PRAs to continue adhering to the PRA Principles, and to undergo independent external assurance reviews, IOSCO, the IEA, IEF and OPEC do not believe that further annual implementation reviews will be necessary at this time". The full report can be found by clicking this link.
S&P Global Platts remains committed to ensuring its price assessment processes continue to fully align with IOSCO's PRA Principles across all commodities and will continue to retain an independent accountancy firm to conduct voluntary reasonable assurance reviews of its alignment to the PRA Principles.
-
IOSCO Principles for Oil Price Reporting Agencies
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Methodology
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Methodology
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Methodology Review & Change
- Platts assigns an individual as owner of the entire change process. This individual is accountable for ensuring all processes are correctly followed.
- Platts publishes a proposal in the form of a Subscriber Note and invites feedback over a specified time period. The timelines may vary depending on the nature of the change.
- After feedback is received and collated, Platts considers the information, makes a decision and publishes a Subscriber Note. If Platts decides to proceed with the change, Platts provides additional opportunity for feedback before the change is implemented.
- Any written feedback received by Platts in relation to a methodology consultation that has not been designated as confidential will be made available to users upon request.
- Any written feedback on methodologies that has not been marked as confidential can be made available to users upon request
METHODOLOGY REVIEW
At a minimum, S&P Global Platts reviews all methodologies annually to ensure they continue to reflect the physical markets under assessment. Platts regularly assesses the relevance of methodologies through continuous contact with the market. Feedback on methodologies is always welcomed by Platts. If you have any comments, please contact the Price Group. Please indicate if you wish your comments to remain confidential.
REVIEW & APPROVAL PROCESSPlatts follows a clearly defined process for introducing or making changes to its methodologies. This process is based on full transparency and communication with industry stakeholders aimed at gaining market acceptance for any proposed introduction or changes to methodology.
Once Platts identifies the need for a methodology change:
Platts employs an internal tracking tool for methodology changes which has been developed to ensure controlled internal sign-off at each stage of any change and also provides a clear audit trail.Platts categorizes methodology changes into types. (See table below.) All methodology changes are formally communicated to the market through Subscriber Notes.
Factors, including external factors beyond the control of Platts, may necessitate changes to, or the cessation of, the benchmark. Such factors may include changes in physical market conditions that could materially impact the parameters of an assessment.
Platts does not sponsor, endorse or market any specific financial product or provide investment advice. Users of Platts benchmarks should nevertheless be advised that changes to, or the cessation of, the benchmark may have an impact upon financial instruments that reference the benchmark and users should contact the relevant product provider or fund manager for more information.
Platts is committed to providing advance notice in a clear time frame that gives users sufficient opportunity to analyze and comment on the potential impact of such proposed changes. Time frames vary depending on Platts analysis of the overall circumstances of a particular change.
Methodology changes that materially alter an assessment and require an update to the methodology specification are preceded by extensive bilateral discussions with market stakeholders. Routine changes, such as seasonal quality or pipeline cycle changes, time-rolling assessments, or clarifications, generally do not materially alter an assessment.
Platts may hold open public forums in which material methodology changes and feedback are presented, and at which further feedback may be given.
When a Platts assessment ceases to be relevant to the marketplace, Platts generally will provide at least six months' notice of its intention to discontinue an assessment, although this timeline can be shortened to three months when Platts expects the market impact to be negligible. If an unforeseen event causes a severe disruption in a particular market, the timeline for discontinuing an assessment (sometimes on a temporary basis) may be shortened even further.
On occasion, Platts may need to respond urgently to changing market conditions, perhaps precipitated or warranted by a serious event or market situation. Such changes are also communicated in a Subscriber Note setting out what the issue is and what changes are to be made.
Change typeDescriptionConsult the marketMethodology Change
Changes to specifications, lot sizes, etc.
Industry feedback will be required
Assessment Discontinuation
Platts is considering discontinuing a published assessment
Industry feedback will be sought. Due to market dependency, notice to market must be appropriate
Assessment New
Platts is considering producing a new assessment
Industry feedback will be sought
Assessment New Competitive
Platts is to begin producing a new assessment in line with strategic product launch
To protect strategic advantage, industry feedback will not be sought
Methodology Clarification
Clarifications to an existing methodology that do not involve changes to the assessment
Industry feedback will not be sought
Methodology Clarification with Guide update
Clarifications to an existing methodology that do not involve changes to the assessment but changes to text in the guide
Industry feedback will not be sought
Methodology Seasonal Change
Seasonal changes, shipping cycles, etc.
Industry feedback will not be sought
Methodology emergency
Resolve issues that require immediate resolution
Industry feedback will not be sought
If you wish to comment on a proposed change, please send an email to the address listed in the relevant Subscriber Note and clearly indicate whether you wish your comments to remain confidential.
-
MOC Participation Guidelines
Market On Close Acceptance and Review Principles and Procedures Guidelines are available.
DOWNLOAD HERE
-
Methodology Review & Change
-
-
Market & Media Issues
-
Market & Media Issues
-
Market & Media Issues
- Platts Aluminum Midwest Premium Explained
- An Introduction to S&P Global Platts Price Assessment Processes and Methodologies
- An Introduction to S&P Global Platts Market-On-Close Process in Petroleum
- S&P Global Platts Role in the Markets: Video
- Introduction to S&P Global Platts Market-On-Close in Oil: Video
- Important Distinctions Between LIBOR Rate Setting and Oil and Energy Market Price Reporting - November 19, 2014
- Transparency and Integrity in Global Oil Markets Pricing
- S&P Global Platts and Energy Markets
-
Market & Media Issues
-