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    ESMA Responds to EC Consultation on Review of Benchmarks Regulation

    February 14, 2020

    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.

     

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    Keywords: Europe, EU, Banking, Securities, Benchmarks Regulation, Critical Benchmarks, Transparency, IBOR Reform, ESMA

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