The energy market is on tenterhooks over late-stage negotiations that will determine whether commodities are to be included in wider benchmark regulation. Discussions within the European Commission have intensified in recent weeks as it works towards a provisional publication deadline of September 11 for the rules, according to people familiar with the situation. The energy industry fears that EC proposals to hold all benchmark contributors, including commodities, liable for their submissions as well as subjecting them to a legally binding code of conduct would lead to a more opaque market because companies would be hesitant to voluntarily offer information. Alex McDonald, chief executive of the London Energy Brokers’ Association, whose members represent a large proportion of more than $2 trillion worth of energy trading a year in London, said: “There has already been a large-scale withdrawal of voluntary price submissions in the commodities markets because of increasing scrutiny even before these questions of liability were raised by the commission. “If commodities are swept up because of pressure on timing by the commission, this could have permanent detrimental effects on the market.” One EC employee involved in the discussions said: “Getting it right is important to ensure it doesn’t hold people back from contributing to commodities benchmarks. This would not be a good outcome. The question is who has what liability and obligations, and in what form. The regulation is unclear in its current draft. It needs to be clarified quickly.” The news comes as the Index Industry Association, the trade body formed last year by Standard & Poor’s, FTSE and MSCI, has for the first time articulated a set of global best practices for index providers. The guidelines spell out the level of rigour index providers should have in creating and maintaining indices, addressing conflicts of interest, setting internal controls and continuity plans, and establishing governance standards. They also attempt to draw a clear line between the work of independent index providers and the business of price reporting agencies and groups that voluntarily contribute data to benchmarks such as Libor and those in the utility sector. Benchmarks have been subject to intense scrutiny by regulators in the wake of the Libor and other benchmark-rigging scandals. Rick Redding, executive director of the IIA, said the group had shown the standards to regulators and that the guidelines were a “living, breathing document” that would evolve over time. He added this would apply to commodity indices that are transaction based.