ESMA published its response to EC consultation on review of the Benchmarks Regulation in EU. The ESMA response is focused on the cessation of critical benchmarks, parity between EU and third-country benchmarks, and transparency. EC will use this feedback to inform its recommendations on the effectiveness of the Benchmarks Regulation. These recommendations will be presented in a report to the European Parliament and Council.
In response to the consultation, ESMA provided the following views on the key issues:
- To enhance the critical benchmarks framework, ESMA proposed that competent authorities should be able to request an administrator to change its methodology. ESMA also proposed that the process of suspension or withdrawal of authorization or registration of an administrator and the assessment, by competent authorities, of the cessation procedures of the administrator should be clarified.
- To ensure a level playing field between EU and third-country benchmarks, ESMA proposed to take into account different alternative approaches when defining the scope of the Benchmarks Regulation
- To increase transparency to the benefit of benchmark users, ESMA proposed to include the list of both EU and third-country benchmarks in its register, together with an appropriate identification of benchmarks.
Under the Benchmarks Regulation, administrators of third country and critical benchmarks must apply for authorization by December 31, 2021, for their benchmarks to continue to be used in EU. Application date for the remaining administrators expired on January 01, 2020. So far, 70 EU administrators are authorized or registered under the Benchmarks Regulation, along with the nine third-country administrators, including six who were recognized, two endorsements, and one administrator following a positive equivalence decision. The Benchmarks Regulation came into force on January 01, 2018 and seeks to increase the robustness and reliability of financial benchmarks.
Keywords: Europe, EU, Banking, Securities, Benchmarks Regulation, Critical Benchmarks, Transparency, IBOR Reform, ESMA
Previous ArticleESRB Publishes Member State Notifications on O-SII and G-SII Buffers
PRA published the policy statement PS8/21, which contains the final supervisory statement SS3/21 on the PRA approach to supervision of the new and growing non-systemic banks in UK.
EBA published a report that sets out the final draft regulatory technical standards specifying the conditions according to which consolidation shall be carried out in line with Article 18 of the Capital Requirements Regulation (CRR).
EBA updated the list of other systemically important institutions (O-SIIs) in EU.
BCBS published two reports that discuss transmission channels of climate-related risks to the banking system and the measurement methodologies of climate-related financial risks.
UK Authorities (FCA and PRA) welcomed the findings of FSB peer review on the implementation of financial sector remuneration reforms in the UK.
PRA and FCA jointly issued a letter that highlights risks associated with the increasing volumes of deposits that are placed with banks and building societies via deposit aggregators and how to mitigate these risks.
MFSA announced that amendments to the Banking Act, Subsidiary Legislation, and Banking Rules will be issued in the coming months, to transpose the Capital Requirements Directive (CRD5) into the national regulatory framework.
EC finalized the Delegated Regulation 2021/598 that supplements the Capital Requirements Regulation (CRR or 575/2013) and lays out the regulatory technical standards for assigning risk-weights to specialized lending exposures.
OSFI launched a consultation to explore ways to enhance the OSFI assurance over capital, leverage, and liquidity returns for banks and insurers, given the increasing complexity arising from the evolving regulatory reporting framework due to IFRS 17 (Insurance Contracts) standard and Basel III reforms.
ECB published results of the benchmarking analysis of the recovery plan cycle for 2019.