FSA scraps controversial benchmarking proposal

The UK Financial Services Authority (FSA) has backed away from a controversial proposal that dealers should use price benchmarks for over-the-counter derivatives as a way of complying with the best execution requirements under the European Union's Markets in Financial Instruments Directive (Mifid).

The proposals, initially made in an FSA discussion paper in May, sparked strong protests from bankers and industry bodies, who argued that benchmarking is incompatible with derivatives and structured