In the document that the ISDA released on November 29, the industry representative asserted that imposing too many rules on indices could drive up the cost of investment and reduce the options available to investors.
The ISDA implored the EC to create different rules for "key public benchmarks" such as the London Interbank Offered Rate (LIBOR) and proprietary indices, such as those created by financial institutions such as lending institutions. The proprietary indices are often used to create specific financial instruments or for the execution of financial strategies.
The LIBOR-rigging scandal that was exposed last summer prompted a battery of regulatory probes, including the consultation recently released by the EC. The revelations that the banks participating in setting the rate were manipulating it for their benefit triggered widespread outrage and resulted in substantial scrutiny for how benchmarks are created. The event also triggered regulators to explore how the rates are calculated.