Proprietary indexes under scrutiny as banks keep their insights secret

Proprietary indexes arouse suspicion among some market participants and although no proof exists that these structured product-friendly indexes have been abused, they do give rise to a potential conflict of interest as banks provide both the benchmark and the products linked to them. A consensus is forming that the way forward is more transparency. By Jonathan Lopez


Financial institutions do not disclose the methodologies they use in their proprietary indexes. This prolongs the suspicion that structured products based on these indexes ultimately hide or at least obscure a conflict of interest. Although banks are under pressure on several fronts to make their business more transparent, they are still reluctant to confront this latest raft of criticism.

"A theoretical possibility is that an index can be manipulated to suit the trading position of the bank, an

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