UBS is a benchmark administrator, as defined in "Principles for Financial Benchmarks" published by the International Organization of Securities Commissions ("IOSCO") on 17 July 2013 (the "IOSCO Principles").
The responsibility for benchmark administration within UBS, and specifically in relation to UBS’s indices that are developed and maintained via its Investment Bank, is undertaken by the UBS Index Group, which is part of Compliance & Operational Risk Control within UBS Group Risk Control. UBS's indices are calculated by the UBS Index Group, through the use of data inputs and the application of calculation formulae as prescribed in the UBS index manuals. For certain UBS indices, the UBS Index Group receive data inputs from internal UBS front office trading and / or individually from third parties. The UBS Index Group and UBS Fund Services do not administer any Index which is based on data inputs collected from a composition of submitters and / or a panel of submitters.
This UBS Code of Conduct for Submitters sets out the framework within which a Submitter making Submissions must operate, and to assist stakeholders of UBS's indices.
UBS will only use Submissions from Submitters which have confirmed that they adhere to this UBS Code of Conduct for Submitters.
This UBS Code of Conduct for Submitters is required guidance issued by UBS as index administrator under the requirements of Principle 14 of the IOSCO Principles. It only applies to indices that are based on Submissions.
UBS Quality Control Procedures
UBS front office trading - for Submissions submitted by UBS front office trading, the Submission is independently corroborated by the UBS Index Group using independent sources that is externally available.
UBS will periodically monitor Submitters to check whether Submitters are making all relevant Submissions.
Code of Conduct
The following Code of Conduct is applicable to Submitters submitting Submissions to UBS for the purposes of calculating any of UBS's indices.
The selection of inputs
Any Submitter must select data inputs for any Submission in accordance with the prescribed criteria set out in the methodology for the relevant UBS index.
Identity and designation of a Submitter
Each individual involved in the Submission process should be formally designated and documented as such by the Submitter. The designation and documentation should include the individual's name, role and reporting line, as well as a description of the individual's involvement in the Submission process.
The individuals identified should include the individual or individuals making the Submission, including the reviewer of the Submission before it is submitted to UBS. The identity of these individuals should be made available to UBS to ensure that UBS is able to validate that the Submission is submitted by a designated person.
Policies, procedures and systems
A Submitter should create, implement and enforce written policies and procedures designed to ensure that the UBS Code of Conduct for Submitters is implemented and applied within the Submitter to protect the integrity of Submissions to UBS. The policies and procedures should be reviewed at least annually, and updated as necessary, and must reflect changes in the UBS Code of Conduct for Submitters.
The policies and procedures of the Submitter should include at a minimum:
- Procedures for pre-Submission validation of Submissions, and multiple reviews by senior staff to check Submissions, including internal sign-off procedures by management for submitting Submissions. In circumstances where UBS reasonably believes there to be any discrepancy with any Submission, a requirement to promptly cooperate with UBS’s own validation exercise.
- The roles and responsibilities of key personnel and accountability lines.
- Procedures for submitting Submissions, including the method to determine the type of eligible inputs, in-line with the applicable UBS index manual.
- Training on Submission responsibilities, as described below;
- Procedures to (i) detect and evaluate suspicious data inputs or transactions, including suspicious Submission reporting, and (ii) ensure, where appropriate, the Submitters submitting data have executed, or are prepared to execute, transactions generating such data and that the concluded transactions were executed at arm’s-length from each other.
- A requirement for records relating to Submissions to UBS to be kept for a minimum of 10 years.
- Policies designed to ensure that any Expert Judgement that may be exercised by the Submitter is exercised in accordance with criteria prescribed by UBS to be followed by such Submitter in exercising such discretion in order to ensure, as far as commercially reasonable, consistency in the approach the Submitter adopts with regard to the exercise of discretion. Where Expert Judgement is exercised, this should be disclosed to UBS at the time at which the Submission is made and documented.
- Whistleblowing policies to facilitate early awareness of any potential misconduct or irregularities that may arise, including external reporting of such cases where appropriate.
- Conflicts of interest procedures and policies, as further described below.
A Submitter from UBS front office trading must comply with UBS’s particular policies and procedures that correspond to the policies and procedures set out in sub-paragraphs (a) to (i) above.
Training and experience
All Submitters and reviewers should have relevant experience in relation to Submissions. The level of experience required should be proportionate to the responsibilities of the function performed by the Submitter and the reviewer.
All Submitters and reviewers should receive training on Submission responsibilities and the training should include at a minimum:
- The UBS Code of Conduct for Submitters.
- Information that should be taken into account when determining Submissions to UBS.
- The use of Expert Judgment.
- Any relevant regulation, including any applicable benchmark regulation or any market abuse regime.
Conflicts of interest
The Submitter’s internal systems and controls should include conflicts of interest procedures and policies, including:
- prohibitions on the submission of data from Front Office Functions, unless UBS is satisfied that there are adequate internal oversight and verification procedures for Front Office Function submissions of data to UBS (including safeguards and supervision to address possible conflicts of interests as per sub-paragraph (a) in the paragraph headed “Policies, procedures and systems” above);
- the physical separation of employees and reporting lines where appropriate; and
- the consideration of how to identify, disclose, manage, mitigate and avoid existing or potential incentives to manipulate or otherwise influence Submissions (whether or not in order to influence index levels), including, without limitation, (i) through appropriate remuneration policies and (ii) by effectively addressing conflicts of interest which may exist between the Submitter’s Submission activities (including all staff who perform or otherwise participate in Submission responsibilities), and any other business of the Submitter or of any of its affiliates or any of their respective clients or customers.
The Submitter should identify any conflicts of interest that arise from submitting Submissions to UBS, which may impair the integrity and independence of UBS's indices, or inappropriately influence UBS's indices. Inappropriate influence may include, but may not be limited to:
- Incentives to manipulate or otherwise influence Submissions in respect of UBS's indices.
- Submitter's personal interests and connections or business connections which may compromise the integrity of Submissions.
- Inadequate remuneration policies which are directly or indirectly rewarded or incentivised by the levels of one or more of UBS's indices.
- Ineffective control over the exchange of information between staff engaged in Submissions to UBS and those staffs which may have an incentive to influence or affect the levels of UBS's indices.
Existing or potential conflicts of interest identified by the Submitter must be disclosed to UBS as soon as practicable.
Confirmation of adherence to UBS Code of Conduct for Submitters
The Submitter should confirm to UBS its adherence to the UBS Code of Conduct for Submitters (i) annually and (ii) whenever a change to the UBS Code of Conduct for Submitters has occurred. The first confirmation should be made to UBS within one year of this publication.
Withdrawal of Submitters
Submitters may not withdraw from surveys or Panels without the written consent of UBS.
For the purposes of this UBS Code of conduct for Submitters the following terms have the following meanings:
Expert Judgment - means the exercise of discretion by UBS or a Submitter with respect to the use of data in determining the level of a UBS index, including extrapolating values from prior or related transactions, adjusting values for factors that might influence the quality of data such as market events or impairment of a buyer or seller’s credit quality, or weighting firm bids or offers greater than a particular concluded transaction.
Front Office Function - means any department, division, group, or personnel of a Submitter or any of its affiliates, whether or not identified as such, that performs, or personnel exercising direct supervisory authority over the performance of, any pricing (excluding price verification for risk management purposes), trading, sales, marketing, advertising, solicitation, structuring, or brokerage activities on behalf of a third party or for proprietary purposes.
Panel - means a subset of legal entities involved in the production, structuring, use or trading of financial contracts or financial instruments used to inform any UBS index, or which reference any UBS index, who are Submitters.
Regulated Market or Exchange - means a market or exchange that is regulated and/or supervised by a Regulatory Authority.
Regulatory Authority - means a governmental or statutory body (not being a Self-Regulatory Organisation) with responsibility for securities and/or commodities and futures regulation.
Self-Regulatory Organisation or SRO - means an organisation that has been given the power or responsibility to regulate itself, whose rules are subject to meaningful sanctions regarding any part of the securities market or industry. This authority may be derived from a statutory delegation of power to a non-governmental entity or through a contract between an SRO and its members as is authorised or recognised by the governmental regulator.
Submission(s) - means prices, estimates, values, rates or other information that is provided by a Submitter to UBS for the purposes of determining a UBS index, excluding data sourced from Regulated Markets or Exchanges with mandatory post-trade transparency requirements.
Submitter - means a legal person providing information to UBS required in connections with the determination of a UBS index.