Growing Concern that Commodity Benchmarks Could be Open to Manipulation

It isn’t just precious metals prices being manipulated anymore. According to a report by UK law firm Clyde & Co., 64 of 170 commodity market participants believed that price benchmarks for commodities such as crude oil and zinc could also be vulnerable to manipulation, Bloomberg reported.

According to the publication:

Reasons given in the survey include sample groups that are too small, a lack of independent oversight and the fact price creators are also traders who can benefit from influencing prices.

“It is an issue that there is a lack of confidence,” Clare Hatcher, a consultant with Clyde & Co.’s International Trade and Commodities Group, said in a phone interview.

Benchmark prices and the way they are determined have come under scrutiny after scandals in markets including foreign exchange, precious metals and the London interbank offered rate, or Libor, showed that some participants had conspired to manipulate benchmarks. The European Commission raided the offices of producers BP Plc, Royal Dutch Shell Plc, Statoil ASA and price reporting agency Platts last year as part of an investigation into fuel-price benchmarks.

Click here to read the full Bloomberg article.