Who Watches the Price‑Setters? PRAs, Manipulation Risk & Modern Oversight (Part II)

Overview

In Part I of this series, we explored how Price Reporting Agencies (PRAs) serve as the unseen engine of commodity price discovery. PRAs like Platts, Argus, and ICIS gather voluntarily submitted trade data and apply expert journalistic judgment to assess daily benchmark prices for everything from crude oil to corn. PRA benchmarks are embedded in contracts worldwide, influencing the cost of fuel, food, and metals.

Yet, as Part I noted, their process has inherent vulnerabilities. Unlike exchange prices determined by transparent trades, PRA assessments rely on voluntary self-reported data, human discretion, and often illiquid markets, all of which can expose them to inaccuracies or even manipulation. PRAs do not operate centralised order books; instead, they trust that market participants report bona fide trades and bids. Illiquidity amplifies risk - when only a handful of transactions set a price, a single distorted report can sway a benchmark. 

These vulnerabilities set the stage for why regulators and industry watchers have grown more concerned about oversight, as we will delve into here in Part II.

HISTORICAL & REGULATORY EVOLUTION

The history of commodity benchmarks has been shaped by market crises and the ensuing drive for transparency. A landmark moment came during the 1973 Oil Shock, when an OAPEC embargo caused oil prices to quadruple (from about $2.90 to $11.65 a barrel) in a few months. The chaos of that period highlighted the need for independent price reporting - companies and countries could no longer rely on cartel postings alone. PRAs like Platts and the fledgling Argus rose in importance by shining a light on real market prices during this volatile era. But those same crises also taught regulators the stakes of accurate benchmarks.

Fast forward to the 2000s and beyond: a series of financial scandals shifted regulatory focus toward benchmarks. The Libor scandal was a wake-up call that benchmarks of all kinds could be abused. Policymakers feared a “Libor-like" failure in commodities, where opaque PRA prices might be manipulated to the detriment of market confidence. In response, the G20 nations in 2012 endorsed new principles to tighten benchmark integrity, not just for interest rates but for oil and commodity PRAs as well.

This led the International Organisation of Securities Commissions (IOSCO) to introduce its PRA Principles (2012), the first global framework for PRA governance and transparency. Around the same time, US and European regulators began scrutinising commodity price formation more closely, especially after wild price swings in the 2007-2008 commodity boom and allegations of market abuses.

Today’s regulatory landscape for PRAs is far more developed: we have non-binding IOSCO standards, formal EU benchmark regulations, and increased oversight from agencies like the CFTC, DOJ, and EU Commission, all aimed at preventing manipulation and ensuring that PRA benchmarks remain credible.

Manipulation Tactics

Because PRAs rely on reported trades and quotes, would-be manipulators have attempted to game the system in various ways. Some of the more common tactics include:

FALSE REPORTING

Submitting fabricated or misleading data to a PRA. Traders might report nonexistent deals or inflated volumes during the assessment window to skew the price. For example, a trader could claim trades at a higher price than actually transacted (or entirely fictitious trades), hoping the PRA takes that information as a valid input. Such false reporting can move a benchmark in a favourable direction for the trader’s positions - and regulators have indeed prosecuted individuals for “pushing benchmark prices up or down" through false data submissions.

COLLUSION

Coordinated schemes by multiple parties to influence the price. This can involve traders conspiring to flood the market-on-close window with only their bids/offers or to exclude competitors from trades. By acting in concert, a group can create the illusion of a price trend. An infamous example involved allegations that major firms in a gas market collectively executed trades at an abnormal price just as the PRA’s window closed. In the UK’s gas market in 2012, a whistleblower observed a series of late-day trades priced far off the market, which he believed were traders colluding to distort the benchmark. This prompted investigations (more on that below), though proving collusion is often challenging.

GAMING THE METHODOLOGY

Exploiting known methodological quirks or low liquidity. This includes tactics often dubbed “banging the close", where a player executes a token trade at an extreme price just as the PRA's assessment window ends, aiming to sway the final index. In markets with sparse trading, even a small trade can have an outsized impact. One exchange observed that certain PRA methodologies “promote the trading of relatively small volumes…with the sole purpose of influencing pricing" in the benchmark process. Another risk arises if traders strategically withhold trades - since reporting is voluntary, a firm might only report deals when it benefits them, creating a biased sample of data. All these behaviours attempt to take advantage of the PRA’s reliance on limited data points and good-faith reporting.

LANDMARK CASES AND INVESTIGATIONS

Over the past decade, several high-profile cases have brought these issues to light, prompting industry reforms:

UK Gas Market Manipulation (2012)

In late 2012, the UK’s wholesale natural gas benchmark (assessed by ICIS Heren) came under scrutiny when a reporter-turned-whistleblower, Seth Freedman, alleged that traders manipulated closing prices.

On 28 September 2012 - a crucial date marking the gas year-end - a cluster of trades was executed at unusually low prices (around 58 pence/therm, well below the prevailing market) just as the benchmark was being set. ICIS flagged this “suspicious trading behaviour" to regulators, fearing it was an attempt to drive the index down.

The incident drew immediate comparisons to Libor (“Libor-like" manipulation) in the media. The UK’s FSA and Ofgem launched an investigation, reflecting how seriously they took the idea of benchmark rigging in energy. In the end, after a year of analysis, officials concluded there was insufficient evidence of market manipulation on that day and brought no enforcement action.

However, the case was a watershed: it publicly exposed how vulnerable PRA prices could be if traders chose to abuse them. It also highlighted differences in PRA approaches - notably, other agencies (Platts and Argus) also assessing UK gas that day excluded those anomalously low trades as unrepresentative, whereas the price in question still made it into the ICIS index.

EU Ethanol Benchmark Cartel (2016 - ongoing)

Another major saga has unfolded in Europe’s ethanol market. In 2013-2015, the European Commission raided several oil and biofuel companies on suspicion that they colluded to manipulate Platts’ ethanol price assessments.

Investigators believed that since 2007 (when Platts introduced its MOC window for European ethanol), certain producers and traders had been coordinating trades to inflate the benchmark. The alleged goal was to boost ethanol’s market price by submitting false or biased trades via the Platts MOC process, thereby benefiting their sales contracts linked to that benchmark.

Notably, documents from the EU probe pointed out that even “the smallest distortion" of a Platts price can significantly change the price of large volumes sold on long-term contracts - underscoring why colluding to move a benchmark by just a few cents could be highly lucrative. Over several years, this turned into a classic cartel investigation.

By 2021-2023, the Commission concluded that at least two companies had indeed engaged in illegal price manipulation. One major producer, Sweden’s Lantmännen, was fined €47.7 million for its role in rigging ethanol benchmarks between 2012 and 2014, and another firm (Abengoa) had been fined €20 million earlier.

Other firms under suspicion settled or had charges dropped due to a lack of evidence. This case marked one of the first antitrust enforcements involving PRA benchmarks, sending a message that colluding to distort reported prices is as serious as fixing prices outright. It also put pressure on PRAs to ensure their methodologies (like Platts’ MOC and eWindow system) have safeguards against coordinated gaming.

CROSS PRODUCT MANIPULATION

Perhaps the most sophisticated scheme is cross-product manipulation, where a trader manipulates the price of one instrument to benefit a position in a related but entirely separate instrument, such as a derivative, swap, or exchange-traded fund (ETF). A clear example of this was seen in allegations against Amaranth Advisors, where traders holding large short positions in natural gas swaps were accused of deliberately selling a substantial number of physical natural gas futures contracts just before the close to depress the benchmark price, thereby increasing the value of their swap positions.

• Amaranth Advisors Fine - $7.5m - Market Manipulation - FERC - Aug-09
• Amaranth Advisors Fine - $7.5m - Market Manipulation - CFTC - Aug-09

U.S. DOJ Probe into Platts Benchmarks (2021)

In the United States, oversight of PRA benchmarks had traditionally been lighter-touch, handled via general anti-fraud and commodities laws. But in 2021, it emerged that the U.S. Department of Justice (DOJ) had opened a wide-ranging investigation into manipulative practices around S&P Global Platts’ benchmarks.

This came on the heels of a couple of specific cases where oil traders were criminally charged for attempting to rig PRA-reported prices. The DOJ’s probe (still ongoing as of this writing) isn’t targeting Platts itself, but rather looking at whether traders across the industry have been misbehaving when contributing data. The fact that criminal prosecutors - not just civil regulators - are involved is a big shift. It “opens a new front" in policing commodities markets, expanding the crackdown on benchmark manipulation beyond Libor-like indexes into physical commodities.

The DOJ, working with the CFTC, has even developed specialised data analytics tools to detect suspicious patterns in trading and submissions. This probe has put traders on notice that intentionally misreporting to a PRA can lead to jail time, not just a slap on the wrist. It has also prompted PRAs in the U.S. to further cooperate with authorities - Platts has noted that it provides underlying data and communications to regulators on request and has processes to ensure data integrity.

KEY REGULATORY FRAMEWORKS

In response to these risks, several regulatory and self-regulatory frameworks now guide how PRAs operate and how benchmarks are governed:

IOSCO Principles for PRAs (2012)

The International Organisation of Securities Commissions issued a set of high-level principles a decade ago, focused specifically on oil and commodity PRAs. These IOSCO PRA Principles (endorsed by the G20 in 2012) cover best practices in governance, transparency, methodology, and conflict of interest management.

They call for annual external audits of a PRA’s processes and for PRAs to publicly document their methodologies and how they ensure data quality. While not legally binding, these principles had industry-wide impact.

The “Big Three" PRAs voluntarily adopted them, with Argus Media leading the way - in October 2013, Argus became the first to undergo an independent PwC audit of its benchmarks, setting a precedent. Others followed suit: for instance, ICIS has now met IOSCO’s standards for 12 consecutive years as of 2024. 

The IOSCO regime effectively brought a baseline of oversight: PRAs had to institute stricter internal controls, audit their price assessments, and publish compliance statements. Even though IOSCO can’t "enforce" these principles, market pressure and the threat of formal regulation meant PRAs had to comply or lose credibility.

Today, PRA websites feature detailed methodology guides and annual assurance reports to demonstrate adherence to IOSCO’s framework.

EU Benchmarks Regulation (2018)

In the wake of financial benchmark scandals, the EU implemented the Benchmarks Regulation (BMR), which took effect in January 2018. This sweeping law brought benchmarks of all types under regulatory supervision within the EU.

For commodity benchmarks, the BMR incorporates many IOSCO principles and requires administrators of critical benchmarks to be authorised and supervised. Major PRAs had to establish EU-based entities (for example, Argus and ICIS created EU subsidiaries) and register with regulators to continue providing benchmarks used by EU financial institutions. Certain PRA benchmarks deemed “critical” or widely used are now subject to direct oversight by authorities (in practice, most commodity benchmarks are considered non-critical, but PRAs opted to comply anyway to reassure users).

In short, the EU BMR ended the era of PRAs being entirely self-regulated - at least in Europe. Now they are “supervised entities” for compliance purposes, audited against regulatory requirements for methodology rigour, governance, and contributor oversight. For example, PRAs must have whistleblowing programs and submit to external reviews under BMR rules (ICIS notes that its IOSCO audits double up to fulfil EU BMR requirements as well). The BMR also gives regulators the power to sanction benchmark administrators for failures. 

ALTERNATIVE OVERSIGHT 

Finally, it’s worth comparing Exchanges vs. PRAs on regulation. Exchanges (like the NYMEX or ICE) must comply with strict regulations, market surveillance, position limits, and real-time monitoring. PRAs historically had none of those obligations. Now, thanks to IOSCO/BMR, PRAs have had to implement exchange-like controls: detailed rulebooks, surveillance of submitted data, audit trails, and even compliance officers who review methodologies. The cost of compliance has risen accordingly - major PRAs spend significant sums on annual external audits and maintaining compliance teams (industry insiders estimate these costs in the seven figures each year for the largest PRAs, once you factor in audit fees, process controls, and training). 

CASE STUDY: A Lesser-KNOWN PRA - General Index

While giants like S&P Global Platts and Argus dominate, the evolving landscape has also seen newcomers bringing innovative approaches. One such up-and-coming Price Reporting Agency is General Index (GX) – a smaller player that exemplifies how PRAs are diversifying in scope and methodology. Founded in the late 2010s, General Index positions itself as a “data-led benchmark provider” and has gained traction by leveraging technology in ways traditional PRAs have not.

Scope and Niche

General Index focuses on energy markets and emerging commodities, providing price assessments across crude oil, refined fuels, biofuels, LNG, and even new sectors like hydrogen and voluntary carbon credits. In total, it publishes over 4,000 daily price indexes spanning these markets. Rather than compete head-on with Platts for Brent crude or Henry Hub gas (the entrenched benchmarks), GX often targets niche or nascent benchmarks where the field is more open – for example, regional biofuel blends, innovative carbon price baskets, or hydrogen hub prices. This strategy fills gaps in the market. Notably, General Index partnered with Bloomberg in 2025 to supply 200+ voluntary carbon market price indexes on the Bloomberg Terminal, indicating how it carves out expertise in new frontiers like carbon trading, where incumbent PRAs are still developing coverage.

METHODOLOGY

Billing itself as “based on data, not journalism,” GX relies on algorithmic calculation of prices using large datasets, in contrast to the traditional reporter-driven model. It aggregates thousands of transactional data points from a wide network of partners (traders, brokers, exchanges) and uses algorithms to calculate a benchmark price, rather than having a human reporter determine the value.

Essentially, General Index is attempting to create commodity indexes akin to stock indexes, where transparent rules crunch the numbers, with minimal subjective intervention. Of course, humans are still in the loop to design the methodology and monitor outputs, but the day-to-day price formation is meant to be automated and objective. This approach can reduce the risk of manipulation: with such breadth of data and algorithmic averaging, it’s harder for any single fake report or tactical trade to move the needle. It’s a bit like crowd-sourcing the price versus relying on a few voices.

TRANSPARENCY

The company emphasises auditability – the algorithms and data inputs can be audited to see how a price was derived. Additionally, by publishing many of its indexes via open platforms (like Bloomberg and AWS Data Exchange), General Index increases visibility. In some ways, GX’s model addresses the very criticisms levelled at traditional PRAs: it offers a more data-transparent, rules-based alternative. However, it also raises new questions: Will the market accept a purely data/algorithm benchmark without the “human sense-check” that reporters provide? Can it gather enough data in illiquid markets to be reliable? These are the challenges GX faces as it grows.

General Index illustrates the next generation of PRAs – smaller firms carving out niches (such as ESG-related commodities or region-specific markets) and using cutting-edge tech to differentiate. Whether or not GX unseats any major benchmarks, its presence is healthy for the ecosystem. It spurs incumbents to innovate and offers market participants a different style of price assessment. As commodity markets expand into new areas (think battery metals, recycled materials, carbon offsets), we may see more niche PRAs like General Index emerge, each bringing fresh ideas to the art of price reporting.

Conclusion: The Unseen Foundation of Modern Markets