TRADE & FINANCE 19
This will pose particular difficulties
for providers of index-tracking
products such as index funds or
exchange-traded funds. It will also
have a negative impact on the
EU investors, as these attractive,
cost-efficient instruments will be
less available – putting EU investors
with long-term savings plans at a
significant disadvantage.
IOSCO principles: high standards
already in force
We believe that the standards
currently enforced by the
International Organization of
Securities Commissions (IOSCO)
are valid and sufficient. All major
benchmark providers – including
STOXX, MSCI, FTSE Russell and
S&P – are currently fully compliant
with IOSCO’s Principles for Financial
Benchmarks. A far better solution
would be to grant global index
providers access to the EU market
for their regulated data benchmarks
based on audited IOSCO
compliance.
Industry uncertainty
Once the regulations are passed, a
period of uncertainty is inevitable.
Asset managers will be forced to
review all the benchmark indices
they use and consider whether
they can continue using them.
Meanwhile, index providers will strive
to get their indices approved as
benchmarks. This will take time, and
the outcomes cannot be predicted.
If asset managers change their
benchmarks too soon, they could
soon after find that the index
provider has managed to get the
benchmark approved. But if they
delay, they could be left without
approved benchmarks.
A cautious outlook
STOXX’s view is clear. We
welcome regulation that promotes
transparency and protects investors.
We have declared compliance
with the IOSCO principles and
have been independently audited.
In our view, the IOSCO principles
provide a level playing field in
benchmark regulation at a global
level, and national as well as regional
initiatives such as the European
Commission’s should be based on
these. In particular, regulated data
benchmarks should be exempted
from strictest regulation. We are
wary of both the uncertainty that
the proposed legislation could bring
and potential negative implications
for competitiveness and innovation
–which could ultimately be to the
detriment of end-investors. Q