Platts Suspends Lehman, Provoking Critics

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Yesterday Platts suspended Lehman Brothers from participating in its Singapore oil trading pricing platform, which means that Lehman's trades aren't taken into account when pricing benchmarks for oil are set. The suspension came after weeks of mounting concern about Lehman's credit worthiness, according to sources. Although Platts isn't normally in the business of credit assessment, it occasionally acts when there is a chance a failing trader could disrupt orderly pricing by having to sell oil in a fire-sale or by being unable to deliver on contracts.
Less than one day after the story broke, some are trying to turn attention away from possible problems at Lehman and towards the power of Platts. Market watchers have now begun to question whether Platts is overstepping its mandate as a pricing clearinghouse to become a private regulator.
"Are they (Platts) a reporting agency or a pricing platform? They can determine who can trade on their own system. This is unusually powerful," a former oil trader tells Reuters.
We're sure that's a very interesting question but far less immediately important than the question of Lehman's financial health. What are the credit issues that have led Platts to suspend Lehman? And why are Lehman and Platts staying so quiet about this?

Platts move on Lehman highlights role as oil referee
[Reuters]

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