top of page

IOSCO Principles For Financial Benchmarks: Statement of Adherence


At the core of MFCo’s approach to Index Administration and Advisory is overall adherence to the framework as put forth by the International Organization of Securities Commissions’ (IOSCO) Principles for Financial Benchmarks (the “Principles”), dated July 2013. MFCo is committed to upholding the doctrine of the Principles, given their robustness and industry-standard application to Financial Benchmarks, including market indexes and indicators, and for direct application to MFCo’s Index Products and Services. The Principles prescribe that financial benchmark administrators attest the extent to which they have implemented the Principles, which may be proportionate to the size and risks posed by each benchmark/index, the administrator, and the associated benchmark development, calculation, and administration process.


Principle 1: Overall Responsibility of the Administrator


MFCo is the administrator for its proprietary and custom commercial indexes (together, the “Benchmarks”, and each a “Benchmark”). As the administrator of the Benchmarks, MFCo has the primary responsibility for all aspects of the Benchmark determination process, including research and development, testing, calculation, and dissemination of the Benchmarks, ensuring appropriate transparency of methodologies, and implementing credible oversight, quality assurance, disaster recovery, and accountability.


MFCo’s Index Committee (“Committee”) is responsible for the development, administration, oversight, and dissemination of the Benchmarks. MFCo has internal controls in place that are governed by the Committee, which are designed to provide for ongoing and periodic Benchmark testing of methodologies and calculations, in addition to the timely dissemination of the Benchmarks. As specified in the Methodology for each respective Benchmark, MFCo strives to publish each Benchmark by the target Dissemination time for each respective Benchmark.


Principle 2: Oversight of Third Parties


MFCo executes substantially all of the administrative and operational activities for each respective Benchmark, and strategically utilizes commercially valid 3rd parties where appropriate for data and certain activities relating to some component parts of the Benchmark administration process. Any 3rd-party chosen by MFCo in relation to Benchmarks are chosen based on , and their inherent and explicit functionality in relation to the Principles. For security pricing, MFCo licenses the use of industry-recognized 3rd-party platform for the pricing and market value functions, pursuant to licensing agreements. MFCo has contractual agreements with each/any 3rd-party resource, and specifies the functions and obligations of each 3rd-party platform. MFCo monitors compliance with these agreements, and conducts regular data testing of each 3rd-party’s output and deliverables through internal quality assurance procedures.


Principle 3: Conflicts of Interest for Administrators


MFCo has also implemented its own company Conflicts of Interest policy within its Code of Conduct, which sets out how MFCo identifies and manages both actual or potential conflicts of interest. This policy, contained within its Code of Conduct, accommodates MFCo‘s role as administrator of Benchmarks.


Principle 4: Control Framework for Administrators


MFCo’s control framework includes:


  • An Index Committee that has administrative oversight of the Benchmarks, and MFCo’s role as administrator of the Benchmarks (see Principle 5 for more detail);

  • Each Benchmark’s Rules and Methodology documentation, which defines the determination, calculations, and, to the extent utilized, any exercise of judgement by MFCo personnel;

  • A Conflicts of Interest Policy, which sets out MFCo’s processes for identifying and managing conflicts of interest;

  • Proper due diligence and documentation requirements on the third party platform operators from which MFCo sources data;

  • A Feedback and Complaints Policy, that outlines MFCo’s process for obtaining market feedback and the handling of external complaints;

  • An operational framework that is designed to consistently monitor and rectify technological, programmatic, and personnel risks;

  • A Code of Conduct that sets forth professional standards that apply to all MFCo personnel and commercial service providers;

  • Regular reviews of source data, Benchmark calculations, and dissemination processes by MFCo personnel. In addition, certain reviews are conducted by established external firms.


As MFCo does not utilize the direct submission method for security pricing, instead using industry-recognized 3rd-party pricing services, which are utilized if also IOSCO adherent (see Principle 7). The 3rd-party pricing services chosen are not market price submission sources themselves, nor have ownership stake or control in submitters. To the extent MFCo will utilize the direct price submission process in the future, MFCo will adhere to the Submitter guidelines set forth in the Principles.


Principle 5: Internal Oversight


MFCo maintains an Index Committee, which is comprised of highly experienced MFCo personnel and is appropriately sized for MFCo’s platform. The Committee may incorporate external technical advisers as deemed necessary. Members of the Index Committee are appointed by MFCo. While MFCo Benchmarks currently use pricing from independent 3rd-party pricing platforms that are IOSCO adherent, to the extent MFCo would use the direct submission process in the future, submitter specific provisions of Principle 5 would be overseen by the Index Committee.


Principle 6: Benchmark Design


Each Benchmark’s Rules and Methodology describe the key features of the Benchmark’s design, including a description on how it seeks to achieve an accurate and reliable representation of the particular market or credit it seeks to measure, and transparent details of each respective Benchmark’s calculations and determination, which are all designed to eliminate any distortion of prices, inputs, and/or Benchmark values.  MFCo also conducts due diligence on each of its 3rd-party data providers, which includes discussions and documentation requests on their methodology, processes, and procedures to address product and service robustness, as well as any potential unethical behavior.


Principle 7: Data Sufficiency


MFCo utilizes industry-recognized 3rd-party pricing services for security pricing, and the platform(s) chosen for each respective Benchmark are required to be IOSCO adherent in their evaluation methods and internal oversight. This includes having sufficient infrastructure and controls in place and a robust pricing methodology anchored in observable market transactions, with the additional use of market color information, in an algorithmic determination of price. MFCo additionally captures its own separate security-level market color information for use in periodic or ad-hoc validation of the pricing provided by these 3rd-party services. MFCo does not rely on its own quote solicitation process directly from securities dealers or other parties who may utilize the Benchmarks in order to eliminate any direct influence on Benchmark value determination by entities who may license and/or reference the Benchmark.


Principle 8: Hierarchy of Data Inputs


Each Benchmark Methodology describes the sequence and hierarchy that is applied for alternative data sources, to the extent explicitly allowed for each respective Benchmark (and only then), and the protocols for the exercise of any judgement by MFCo personnel. MFCo endeavors to keep the Benchmark constituent pricing function at “arm’s length” within the rules and methodologies of its Benchmarks. Therefore, in order to preserve integrity of determination, as stated in the Data Sufficiency principle, MFCo utilizes industry-recognized 3rd-party pricing services for security pricing, and the platform(s) chosen for each respective Benchmark are required to be IOSCO adherent in their evaluation methods and internal oversight, which is anchored in observable transactions, with the additional use of market color information, in an algorithmic determination of value.


Principle 9: Transparency of Benchmark Determinations


MFCo creates its Benchmark methodologies with complete calculation formulas, identification of all Benchmark data inputs and sources, and administration logic for each respective Benchmark. If there are any Benchmarks, due to the uniqueness of the market the Benchmark is intended to represent, where it is deemed necessary and appropriate to include any exercise of judgement by MFCo in the absence of necessary market data for Benchmark calculation on any day, the allowance and process will be clearly outlined in each Benchmark’s methodology, and any instance of this occurrence would be communicated to clients via electronic communication. MFCo is available to respond to any questions that Benchmark licensees may have in reference to this on any specific Benchmark.


Principle 10: Periodic Review


MFCo has procedures and Benchmark calculation technology tools in place to review the relevant market factors (including Benchmark constituent structural changes or market conventions), and test Benchmark calculation results, for each respective Benchmark to determine whether any enhancement or alterations would be made to a Benchmark’s methodology or calculation protocols. All proposed changes are reviewed and approved by the Index Committee, with the associated documentation and communication made available and transmitted to the appropriate Benchmark licensees, including the reasoning for any changes. Reviews consider the appropriateness of the Benchmark for its intended application, the adequacy of its input data, and its operational integrity, and may include the discontinuance or replacement of a Benchmark.


Principle 11: Content of the Methodology


MFCo Benchmark are publicly available on MFCo’s website at, and/or upon request. MFCo conducts periodic reviews of its Methodology, and each Benchmark methodology includes complete calculation formulas, identification of all Benchmark data inputs and sources, and administration logic for each respective Benchmark, which have been reviewed and approved by the Index Committee. MFCo believes that each of its Benchmarks rules and methodology documents published on its website, or furnished upon request, contain sufficiently comprehensive detail in order to allow both licensees and potential licensees to understand how the Benchmarks are calculated and administered, so that they may be able to adequately determine the Benchmark usefulness and relevance to their needs.


As MFCo does not currently utilize the price submission process, however, to the extent MFCo utilizes direct price submission in the future, MFCo will adhere to the Submitter guidelines within the Principles.


Principle 12: Changes to a Methodology


The Index Committee has responsibility for review and oversight of formally proposed changes and alterations to any Benchmark methodology. If an Index Committee review results in an approved change to any Benchmark methodology, MFCo will externally publish the resulting updated methodology documentation to its website at and electronically communicate to licensees of the changes as well.  MFCo will take into consideration ongoing and scheduled consultation with market participants on any considered Benchmark methodology changes, and will feasibly provide licensees advance notice of any proposed changes.


Principle 13: Transition


MFCo includes transition language and protocols in its Licensing Agreements for instances of Benchmark termination, discontinuation, or replacement. Transition may occur to regulatory, market, or other forces which may substantially change the appropriateness of a Benchmark’s methodology, or the legal and compliance feasibility of operating the Benchmark. MFCo outlines the possibility, regardless of the unlikelihood, that changes to, discontinuance of, or replacement of a Benchmark may occur for new or unforeseen circumstances, and licensees should provide for this in any agreements or financial instruments that reference any specific Benchmark. Any transition will be adequately and formally communicated to licensees, as outlined in each respective licensing Agreement, with sufficient advance notice so that licensees may make proper accommodations.


Principle 14: Submitter Code of Conduct


MFCo does not currently utilize submitters in a quote solicitation process, however, to the extent MFCo will utilize the direct price submission process in the future, MFCo will adhere to the Submitter guidelines set forth in the Principles, including the usage of a Submitter Code of Conduct.

Principle 15: Internal Controls over Data Collection


As stated earlier in this section, MFCo sources Benchmark constituent information from industry-recognized 3rd-party platforms that are also IOSCO adherent. MFCo maintains the requisite licensing agreements with each data provider, and conducts preliminary and ongoing due diligence on each.

MFCo has computer-based internal controls over the data ingestion, integrity, and error correction. Additionally, MFCo institutes a robust authority and access control framework to protect and limit MFCo internal applications and data to MFCo to authorized personnel and contractual service providers only. To aid data integrity, MFCo accumulates market color data to help corroborate, verify, and/or identify any data item variability.


Principle 16: Complaints Procedures


MFCo provides a Feedback and Complaints policy in in order to encourage and accommodate any comments, suggestions, and complaints regarding any of MFCo’s Benchmark’s and their calculation, methodology, and market relevance.


Principle 17: Audits


MFCo performs internal audits of the operational administration for its Benchmarks, in addition to ongoing and periodic verification, backup, and version control of its Benchmark calculation engines and databases. Audits or verifications by 3rd-party backup service providers or other external entities may also be incorporated.


Principle 18: Audit Trail


MFCo retains appropriate historical data, outputs, and disseminations associated with the calculation of its Benchmarks, including data taken from direct sourcing or 3rd-party providers, communications of changes by these sources or 3rd-party providers, changes in methodology and calculation engines, and feedback and complaints from market participants. MFCo retains records relating to the Benchmarks for the life of each respective Benchmark.


Principle 19: Cooperation with All Regulatory Authorities

MFCo will cooperate and collaborate with relevant regulatory authorities that govern MFCo’s business model, activities, and client products and services.

bottom of page