All 'self-certified' financial market prices should be based on actual trade data

We live in the information age and, as a result, it is completely unacceptable that any financial market should have to rely on quotes or estimates from banks rather than using the actual trades.

As reported by the Telegraph,

The Financial Services Authority's head of financial conduct Martin Wheatley is expected to examine many other “self-certified” market prices in his upcoming review investigating Libor. 

Prices which, like Libor, are based on quotes or estimates from market players rather than actual trading, include foreign exchange rates, as well as prices for precious metals and - in part - benchmark prices for other commodities.....

Whether or not these other markets were manipulated by the banks is irrelevant.  What is relevant is that they could be and this is unacceptable.

Mr Tucker, the Bank of England's deputy governor, on Tuesday told MPs that Barclays’ abuse of the Libor system may be only one part of the banks’ dishonesty over crucial financial information, suggesting that other markets should now be investigated. 

The official inquiry into Libor – which helps determine interest rates for householders and businesses – should be broadened to include several over markets where banks are trusted to report their own data, he said....

Having admitted to lying once, there is no reason to trust the banks reporting their own data again.

The Libor scandal could be repeated in a number of other “self-certifying” markets where prices are determined, he added. “Self-certification is clearly open to abuse, so this could occur elsewhere,” he said.

Since self-certification is open to abuse and there is a simple alternative of using all the actual trade data, it is time to permanently move all markets to using actual trade data.