Following the recent manipulation of Libor, the European Commission has launched a consultation inviting stakeholders to comment on possible new rules for the production and use of indices serving as benchmarks in financial and other contracts.

The consultation covers all benchmarks, including interest rate benchmarks such as LIBOR and commodities and real estate price indices. It seeks to identify possible shortcomings at every stage in the production and use of benchmarks.

The objective is to ensure the integrity of benchmarks. All options are on the table but any solution should guarantee that benchmarks are not subject to conflicts of interest, reflect the economic reality that they are intended to measure and are used appropriately.

The Commission has identified five relevant areas for comment:

• the scope, process and nature of indices and benchmarks;
• governance and transparency in the use of actual transaction data;
• the purpose and use of benchmarks
• the provision of benchmarks by private or public bodies; and
• the impact of potential regulation, including transition, continuity and international uses issues.

Commissioner for internal market and services Michel Barnier said: 'The international investigations underway into the manipulation of LIBOR have revealed yet another example of unacceptable behaviour by banks.

'Doubts about the accuracy and integrity of indices can undermine market confidence, cause significant losses to consumers and investors, and distort the real economy. It is, therefore, essential that steps are taken to ensure the integrity of benchmarks and the benchmark-setting process.

'The Commission has already acted quickly to amend its legislative proposals on market abuse. However, changing the sanctions regime alone may not be sufficient: wider work is required to regulate how indices and benchmarks are compiled, produced and used.'

This follows the launch of the Wheatley review on the regulation of Libor which found that the inter-bank rate practice is 'no longer fit for purpose'. The review began in July following shocking revelations of how the interbank lending rate was rigged at Barclays.

The closing date for submissions is 15 November 2012.