LONDON, June 18 Relying on just one set of data to compile a foreign currency benchmark does not ensure its reliability at any given time, the European Central Bank said in a briefing paper.
The European Union is approving a law to regulate market benchmarks after banks were fined for rigging the London Interbank Offered Rate or Libor, an interest-rate benchmark.
Global regulators are investigating similar allegations regarding currency markets.
In the briefing paper dated June 18, the euro zone's central bank said the FX market is getting more fragmented across a number of trading platforms and banks.
"While, in principle, arbitrage across platforms should ensure the conformity of the pricing available on each of them, the fact that the FX benchmarks are often computed with a single primary data source does not fully ensure that benchmark calculations best represents the market during the fixing point of time or window," the ECB paper seen by Reuters said. (Reporting by Huw Jones, editing by Matt Scuffham)