Intercontinental Exchange announced on Monday that its subsidiary, ICE Benchmark Administration Limited (IBA), has been authorized as a regulated benchmark administrator under the EU’s Benchmarks Regulation. The US-based global network of exchanges and clearing houses stated that IBA was given final authorization by the UK’s Financial Conduct Authority (FCA).
Founded in 2014, IBA provides benchmark data to investors across different asset classes. In doing so, it enables users to calculate what prices they should be charging for their services.
For example, the company holds a daily auction to determine the price of gold and silver. The auction runs in rounds of thirty seconds, and at the end of each round, the imbalance between buyers and sellers is calculated. When this imbalance falls within a certain threshold, the price for gold is set for the day.
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Beyond gold and silver, the company has developed a crowd-sourcing system to aid companies who want to exchange non-cleared derivatives. It also provides benchmark data for short-term bank borrowing rates and interest rate swaps and spreads.
The company’s founding was in part due to a market need for benchmark data that was aligned with current regulatory requirements. IBA’s non-cleared derivatives service, for instance, was built to fit with the margin requirements regulation set out by the Basel Committee on Banking Supervision and the International Organization of Securities Commissions in 2013.
Commenting on the FCA’s regulatory approval, Tim Bowler, IBA’s president, stated: “We are pleased that IBA has received EU regulated benchmark administrator status. IBA was founded to reform and bring transparency to global benchmarks. We aim to adopt the highest standards for the benchmarks that we administer.”