Business Commons^™

Benchmark Regulation, Gina-Gail S. Fletcher

Faculty Scholarship

Benchmarks are metrics that are deeply embedded in the financial markets. They are essential to the efficient functioning of the markets and are used in a wide variety of ways—from pricing oil to setting interest rates for consumer lending to valuing complex financial instruments. In recent years, benchmarks have also been at the epicenter of numerous, multi-year market manipulation scandals. Oil traders, for example, deliberately execute trades to drive benchmarks lower artificially, allowing the traders to capitalize on the manipulated benchmarks. This ensures that later trades relying on the benchmarks will be more profitable than they otherwise would have been. …

Restoring Transparency To Automated Authority, Frank Pasquale

Faculty Scholarship

Leading finance, health care, and internet firms shroud key operations in secrecy. Our markets, research, and life online are increasingly mediated by institutions that suffer serious transparency deficits. When a private entity grows important enough, it should be subject to transparency requirements that reflect its centrality. The increasing intertwining of governmental, business, and academic entities should provide some leverage for public-spirited appropriators and policymakers to insist on more general openness.

However well an "invisible hand" coordinates economic activity generally, markets depend on reliable information about the practices of core firms that finance, rank, and rate entities in the rest of …