“There is nothing less practical than a bad theory,” wrote CEO Paul Shott Stevens of the Investment Company Institute (ICI) in a July 2016 blog.  Mr. Schott introduced a series of recent findings that the ICI suggests may present a rebuttal to their members of the “first-mover” hypothesis. What is that, one may ask, and why should I care?

Convenience and low cost have always been the prime motives for customers to use bank-provided benchmarks in their portfolio analytics. That user model, shaken by the Libor scandal, now seems upside down after US, UK and Swiss regulators fined 5 major banks more than US$3 billion for rigging FX rates in London.  Going forward, bottom-up benchmarks based on customer reported activity may displace the banks' own rate reporting.