Well-designed, robust benchmarks that are reliable and resistant to manipulation are critical for the stability of the financial system. In a sense, financial benchmarks can be seen as a public good. The BIS, in a 2013 report titled ‘Towards better reference rate practices: a central bank perspective 2’ highlighted reliability, robustness, frequency, ready availability and representativeness as the desirable features of a benchmark.
Reliability is based on governance standards and administration to protect from manipulation and errors; robustness relates to maintaining integrity even during episodes of market stress; proper frequency provides stability as well as relevance; representativeness implies that the benchmark is rooted in appropriate prices; and ready availability facilitates ease of pricing and contract verification.