Singapore Sling: How Coercion May Cure the Hangover in Financial Benchmark Governance

35 Pages Posted: 7 Nov 2013

See all articles by Justin O’Brien

Justin O’Brien

Harvard University - Edmond J. Safra Center for Ethics; University of New South Wales (UNSW)

Date Written: November 5, 2013


The International Organization of Securities Commissions (IOSCO) has formalized a set of principles designed to restore confidence in a range of systemically important financial benchmarks. The alacrity with which IOSCO has moved and its endorsement by the G20 is notable. It is far from clear, however, whether the principles provide a basis for sustainable reform. This derives from diametrically conflicting views within IOSCO as to whether benchmarks based on hypothetical submissions can be reformed or must be replaced by systems anchored in observed transactions. As a consequence the principles paper over rather than resolve core ethical deficiencies exposed in a still metastasizing scandal. The paper examines how and why the IOSCO process has privileged symbolism over substance. It then evaluates an alternative approach. The Monetary Authority of Singapore (MAS) has developed an innovative solution whereby contributing banks to the Singapore Interbank Offered Rate (Sibor) are mandated to privilege the integrity of the benchmark over individual institutional reputational or litigation risk. This regulatory re-engineering of risk management integrates rules, principles and social norms to forge restraint. The paper concludes that this holistic approach, once calibrated to the specific political, economic and cultural dimensions of specific markets, is more likely to embed ethical decision-making, reduce the risk of institutional corruption and achieve socially beneficial outcomes.

Keywords: Institutional Corruption, London Interbank Offered Rate (Libor), International Organization of Securities Commissions, financial benchmark governance, financial crisis

Suggested Citation

O’Brien, Justin, Singapore Sling: How Coercion May Cure the Hangover in Financial Benchmark Governance (November 5, 2013). Edmond J. Safra Working Papers, No. 29. Available at SSRN: or

Justin O’Brien (Contact Author)

Harvard University - Edmond J. Safra Center for Ethics ( email )

124 Mount Auburn Street
Suite 520N
Cambridge, MA 02138
United States

University of New South Wales (UNSW) ( email )

High St
Sydney, NSW 2052

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