In the wake of a rate scandal in Britain, Canadian regulators have examined the setting of a Canadian benchmark rate, concluding that some changes are in order.

The Investment Industry Regulatory Organization of Canada (IIROC) Thursday published the results of its review of the Canadian Dealer Offered Rate (CDOR), which is a benchmark index for Canadian bankers’ acceptances that serves as a reference rate for futures contracts, forward rate agreements and swaps.

IIROC’s review comes following the discovery that firms involved with the setting of the benchmark London Interbank Offered Rate (LIBOR) rate in the UK engaged in manipulation designed to benefit their own trading positions and their perceived creditworthiness. That scandal has alerted regulators around the world to possible risks in benchmark setting.

However, IIROC’s review was not an investigation into potential manipulation of CDOR. Rather, it examined the benchmark’s operation and supervision generally, and concluded that some reforms are required. “Steps can and should be taken to strengthen the safeguards around the integrity of CDOR for its ongoing use with respect to BAs and other instruments,” it says.

In particular, it recommends that there should be specific documented criteria for participation in the rate setting process; more explicit documentation regarding the definition, calculation methodology and transparency of CDOR; and, documented regulatory expectations for participants’ supervision of rate-setting activity and controls to prevent potential manipulation.

Unlike the Wheatley Review in the UK, IIROC did not find that CDOR should be based on actual transaction data, rather than firms’ estimates, noting, “this approach may not be so appropriate for CDOR, given its differences from LIBOR and other similar benchmarks.” Although, it allows that, “This is a point which the relevant authorities will need to consider further.”

IIROC says it has shared the results of its review with the Bank of Canada, the federal Department of Finance, and other Canadian regulators, and that these authorities have agreed to consider the issues identified in the review; along with issues identified in ongoing international work on benchmarks.

“IIROC initiated this policy review of current practices among CDOR survey participants in 2012 in light of global developments relating to survey-based reference rates and to strengthen the oversight of CDOR going forward,” said Susan Wolburgh Jenah, president and CEO of IIROC.