International Organisation of Securities Commission (IOSCO) Chairman Masamichi Kono says the benchmarks for financial contracts must be market-driven.

He told a European Parliament public hearing into market abuse – called after the manipulation of Libor, the London Interbank Offered Rate – that regulators internationally must urgently strengthen co-operation.

Although financial market regulators have been working for years to prevent abuse, Mr Kono says that “what is perhaps new is the increasingly global outreach of the issues”.

Mr Kono, from Japan’s Financial Services Agency, says proper supervision and regulation of benchmarks is needed, along with sanctions to deter misconduct.

But he says this must be balanced against the need to maintain competitive and well-functioning financial markets.