Industry bodies are beginning to come out in support of the need for more regulation regarding the setting of financial benchmarks following the Libor-fixing controversy earlier this year.

Last week, the European Commission launched a consultation on possible new rules for the production and use of indices serving as benchmarks in financial and other contracts.

“It is important to restore trust in these benchmarks, given the important role they play in establishing rates for many loans and market transactions,” said Iain Coke, head of the financial services faculty at the Institute of Chartered Accountants in England and Wales, a U.K. accounting body.

“We expect regulators to increasingly demand independent assurance on important market benchmarks, such as Libor. This is a global issue.”

The review is in response to the Libor scandal, when Barclays was hit with a record fine of $451 million by U.K. and U.S. regulators in June after Britain’s second biggest bank admitted to manipulating the London interbank lending rate, or Libor, from 2005-2009 to the benefit of its derivative positions, as well as by a desire to make the bank look stronger during the financial crisis. Other banks are likely to be implemented in the scandal.

The European Commission’s consultation is encompassing not just interest benchmarks such as Libor but also commodities and real estate price indices and it aims to identify possible shortcomings at every stage in the production and use of benchmarks.

Regulators and policymakers across Europe have hardened their stance on Libor since the crisis first broke and are looking to impose strict new rules over financial benchmarks.

“The international investigations under way into the manipulation of Libor have revealed yet another example of unacceptable behavior by banks,” said Michel Barnier, the European Union’s financial services commissioner.

“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.”

In the U.K., where the scandal first broke, the Financial Services Authority’s managing director, Martin Wheatley, is currently undertaking a government-sponsored review into how the Libor rate is set and if it should be regulated, in a process known as the Wheatley Review.

While the world’s top central banks today agreed to set up a joint body to look into the setting of Libor.

In response, one industry trade body, the Global Financial Markets Association (GFMA), a lobby group for financial and capital market participants, today published its ‘Principles for Financial Benchmarks’, an outline of proposed best practice in the governance of financial benchmarks, which, it says, will promote both the integrity and efficiency of the global financial markets.

“In light of the ongoing regulatory review of financial benchmarks, GFMA members have come together to determine a set of best practices, which are needed to enhance the integrity of global financial markets,” said Simon Lewis, chief executive of GFMA.

“The key benchmark indices around the world need to be subject to consistent, transparent and sound practices to ensure the smooth functioning and efficiency of global financial markets. GFMA’s principles are a major step forward in helping achieve this.”

GFMA’s paper sets out key responsibilities for the benchmark sponsor and clearly defines the roles of the participants, as well as identifying ways to ensure transparency in the benchmarking process. The principles cover areas of benchmark quality, record-keeping, data collection and outline how to set up effective controls.

The lobby group recommends that all systemically important financial benchmarks should be subject to regulatory oversight while all new regulation should be developed consistently across jurisdictions, avoiding duplication and defining clear regulatory responsibilities for oversight of individual benchmarks.

Currently, Libor, which serves as a fundamental benchmark to around $800 trillion of financial contracts around the world and is commonly used for Sterling and U.S. dollar denominated instruments, is a notional rate set by a 16-bank panel based in London. Members of the panel of international banks are all asked how much it would cost to borrow from one and other and the rate is then calculated and published daily by market data vendor Thomson Reuters on behalf of the British Bankers’ Association, a trade association for the U.K. banking and financial services sector, covering a variety of currencies and time durations.