* IOSCO suggests oil price reporting may need oversight
* Consultative paper asks for ideas to improve industry
* G20 expected to support IOSCO proposals
LONDON, March 1 (Reuters) - Oil price reporting by industry media could be regulated in an attempt to prevent market manipulation and increase transparency for the world's biggest traded commodity, global securities regulator group IOSCO said on Thursday.
Price assessments for over-the-counter oil trade and derivatives are used to settle billions of dollars worth of deals and to help settle trade on benchmark futures exchanges.
The International Organisation of Securities Commissions said there was a risk that reported prices could be manipulated by submission to the agencies from the market of selective or false prices.
Under pressure to curb speculation blamed for huge swings in oil spot markets, the Group of 20 (G20) top economies last year asked IOSCO to look at the role of price reporting agencies (PRAs). The lead agencies are Platts, owned by McGraw-Hill , and privately-held Argus Media.
IOSCO recommended a range of ideas for physical oil market PRAs, including a possible independent regulator.
"The range of potential approaches to PRA oversight may realistically lie between recommending a form of self regulation to recommending a direct governmental regulatory system," IOSCO said in a consultation report.
Officials at European regulators have said they expect the G20 to adopt some of the options offered by IOSCO when the G20 meets in June in Mexico, and new regulations could be in place within two years.
The IOSCO report said sometimes assessments of oil prices were based on a very small number of trades.
"The number of transactions in certain benchmark assessments can often be less than five and not infrequently there are no prices submitted," the report said.
Oil price reporting agencies now have no external body to ensure oversight of reporting standards, proper levels of transparency or other safeguards, it said.
Argus Media chairman and chief executive Adrian Binks said in a statement Argus had already contributed to a G20 mandated study of independent price reporting organisations:
"We are happy to continue to provide information and work with regulators and the industry to help ensure better understanding of how the physical markets are assessed."
IOSCO has asked for responses to its consultative report from oil companies, banks, PRAs and other participants in the oil market by March 30.
IOSCO members regulate more than 95 percent of the world's securities markets in more than 100 countries, including the U.S. Securities and Exchange Commission, Britain's Financial Services Authority and Japan's Financial Services Agency.
Thomson Reuters competes with Platts in providing news and information to the oil markets. (Reporting by Christopher Johnson; Editing by Anthony Barker)