Methodology Rationale

Components of Methodology

1) Market Definition & Assessment Design

Market Definition and Scope of Assessment

Each assessment clearly defines the physical market being evaluated, including the commodity or product, grade or specification, quality parameters, delivery location, delivery terms, delivery period, reference unit, and currency. This ensures that assessments are unambiguous, comparable, and representative of the intended segment of the physical market.

Assessment Objective

The intended economic purpose of each assessment is specified, including whether it reflects spot or forward physical market value and the typical commercial conditions prevailing in the defined market.

Commercial Conventions and Reference Parameters

Applicable commercial conventions, including units of measurement, pricing basis, and market norms, are documented to ensure consistency with established industry practice and comparability across assessments.

2) Assessment Timing & Data, Input Controls

Assessment Structure, Timing, and Publication Framework

Each assessment clearly defines the physical market being evaluated, including the commodity or product, grade or specification, quality parameters, delivery location, delivery terms, delivery period, reference unit, and currency. This ensures that assessments are unambiguous, comparable, and representative of the intended segment of the physical market.

Market Data Universe

The types of market data eligible for consideration are specified, including concluded and reported transactions, firm bids and offers, and other relevant market information, in a manner consistent with the structure of the underlying physical market.

Eligible Submitters and Submission Channels

The categories of entities permitted to submit market data and the approved submission mechanisms are defined to ensure traceability, accountability, and integrity of submitted information.

Data Verification and Confirmation Procedures

Verification practices are applied to support the bona fide nature and accuracy of submitted market data, including the use of corroboration from back-office or operational functions where appropriate.

3) Data Quality, Hierarchy & Liquidity Controls

Data Quality Controls and Exclusion Criteria

Objective standards are applied to assess the credibility, integrity, and representativeness of market data. These standards define the circumstances under which non-bona fide, non-arm’s-length, anomalous, or otherwise non-representative data may be excluded from an assessment.

Commercial Conventions and Reference Parameters

Applicable commercial conventions, including units of measurement, pricing basis, and market norms, are documented to ensure consistency with established industry practice and comparability across assessments.

Liquidity Thresholds

The sufficiency of transaction data is evaluated for each assessment. Where appropriate, transaction data thresholds are applied, or the rationale for the absence of fixed thresholds is documented, having regard to market structure and liquidity characteristics.

Alternative Assessment Procedures

Procedures applicable during periods of low liquidity or absence of transactions are defined, including the use of bids and offers, related market indicators, or estimation techniques, subject to defined controls, documentation, and review.

Concentration Risk and Key Submitter Dependency Controls

Controls are applied to address risks arising where market data for an assessment is materially influenced by one or a limited number of reporting entities. These include enhanced scrutiny, corroboration, and escalation procedures.

4) Assessor Judgment & Review

An assessor is a qualified market analyst responsible for collecting, validating, analysing, and applying methodology to determine and publish a price assessment.

Assessor Judgment Framework

The exercise of professional judgment is governed through explicit criteria defining when judgment may be applied, the factors guiding its use, and the requirement for contemporaneous documentation.

Consistency and Oversight of Assessors

Procedures are maintained to ensure consistency in the application of methodologies across assessors, including training standards, supervisory oversight, and periodic review of assessor competence.

Internal Review and Approval of Assessments

Price assessments are subject to internal supervisory review and approval prior to publication to confirm adherence to the methodology and the appropriate application of judgment.

5) Transparency and Market Disclosure

Transparency, Governance & Accountability

Explanatory information is published, to the extent reasonable and without delaying publication, to support market understanding of how assessments are developed, including liquidity context, data composition, and the use of judgment where applicable.

Audit Trail and Record Retention

Contemporaneous records are maintained of all market data, assessor judgments, exclusions, approvals, and related documentation. Such records are retained for a minimum period consistent with IOSCO principles.

Methodology Governance and Internal Review

Governance arrangements are in place for the oversight of methodologies, including defined internal review and approval processes and review frequencies to ensure continued relevance and integrity.

Methodology Change Management

Structured procedures govern the implementation of material methodological changes, including advance notice, stakeholder consultation where appropriate, and transparent communication of changes.

Complaints Handling and Accountability Mechanisms

Written procedures are maintained for receiving, investigating, resolving, and retaining records of complaints relating to the assessment process, ensuring timely, independent, and fair resolution.

Regulatory Cooperation and External Audit

Relevant audit trails and documentation are made readily available to market authorities in accordance with applicable law, and an independent external auditor is appointed to periodically review and report on adherence to IOSCO principles.