Featured Product

    FCA Proposes Policy on New Powers Under Benchmarks Regulation

    November 30, 2020

    FCA is consulting on policy proposals with respect to the new powers that would be granted to FCA under the Benchmarks Regulation, as amended by the Financial Services Bill introduced into the UK Parliament on October 21, 2020. One consultation paper seeks views on designating an unrepresentative benchmark using new powers under the proposed Article 23A to the Benchmarks Regulation. The other consultation paper seeks views on requiring changes to a critical benchmark, including its methodology, using new powers under proposed Article 23D of the Benchmarks Regulation. The consultation period on these policy proposals closes on January 18, 2021, post which FCA expects to publish the finalized approach in the form of Statements of Policy.

    With respect to the consultation on designation of benchmarks under new Article 23A, the Financial Services Bill proposes the insertion of a new Article 23A into the Benchmarks Regulation. Its provisions would grant FCA the ability, in certain circumstances, to designate a critical benchmark as an Article 23A benchmark. Such designation would result in a general prohibition on use of the benchmark by supervised entities as well as powers for FCA to exempt some or all existing use of the benchmark from this general prohibition. It would also empower FCA to impose requirements on the benchmark administrator relating to the way in which the benchmark is determined, including by amending the benchmark’s methodology. In its consultation, FCA outlines the factors it proposes to take into consideration when deciding whether FCA should designate a critical benchmark, such as a currency-tenor (setting) of LIBOR, as an Article 23A benchmark.

    With respect to the consultation on exercise of powers of FCA under new Article 23D, the Financial Services Bill proposes the insertion of a new Article 23D into the Benchmarks Regulation. Its provisions would grant FCA the ability, in certain circumstances, to impose requirements on the administrator of a critical benchmark designated under new Article 23A. A critical benchmark can be designated under new Article 23A where FCA has found that it is no longer representative of the market it is intended to measure, or its representativeness is at risk, and its representativeness will not be restored and maintained. Following such a designation, the requirements FCA could impose on the benchmark administrator are set out in the proposed new Article 23D(2). These relate to the way in which the benchmark is determined, the rules of the benchmark or, where the benchmark is based on submissions from contributors, the benchmark’s code of conduct. This FCA consultation is drafted with a focus on LIBOR. FCA will conduct a further consultation in relation to specific future decisions to exercise the Article 23D power in respect of LIBOR.

    FCA has published these consultations based on the assumption that the Financial Services Bill will be passed in its current form. The exercise of these powers would be subject to a decision by ICE Benchmark Administration (IBA), the FCA-regulated and authorized administrator of LIBOR, to cease publication of LIBOR as the conclusion of its consultation. It would also be subject to the powers that have been proposed in the Financial Services Bill being enacted by the UK Parliament, feedback to policy proposals on how FCA may use its powers, and any subsequent consultations on decisions to use those powers once the policy is finalized. FCA plans to consult, in the second quarter of 2021, on its approach to the exercise of powers under the proposed Article 21A and Article 23C. FCA will conduct a further consultation in 2021 in relation to any decision to exercise the proposed Article 23D power in respect of LIBOR.

     

    Related Links

    Comment Due Date: January 18, 2021

    Keywords: Europe, UK, Banking, Securities, Benchmarks Regulation, Financial Services Bill, LIBOR, Interest Rate Benchmarks, Benchmark Reforms, Basel, FCA

    Related Articles
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    News

    HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets

    The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.

    January 12, 2022 WebPage Regulatory News
    News

    FCA Registers Securitization Repositories; PRA Issues 2022 Priorities

    The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.

    January 12, 2022 WebPage Regulatory News
    News

    EC Regulation Sets Out Methods for Measuring K-Factors Under IFR

    The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.

    January 11, 2022 WebPage Regulatory News
    News

    BIS Studies How Platform Models Impact Financial Stability & Inclusion

    The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.

    January 10, 2022 WebPage Regulatory News
    News

    ESAs Publish List of Financial Conglomerates for 2021

    The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.

    January 07, 2022 WebPage Regulatory News
    News

    APRA Licenses Two More Banks, Reduces Committed Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) updated the list of authorized deposit-taking institutions, granting license to Barclays Bank PLC and Crédit Agricole Corporate and Investment Bank to operate as foreign authorized deposit-taking institutions under the Banking Act 1959.

    January 07, 2022 WebPage Regulatory News
    News

    EU Issues SII Corrigendum; EIOPA Assesses SII Reporting Exemptions

    EU published, in the Official Journal of the European Union, a corrigendum to the Delegated Regulation 2015/35, which supplements Solvency II Directive (2009/138/EC).

    January 06, 2022 WebPage Regulatory News
    News

    EBA Opines on Impact of De-Risking and Associated AML/CFT Challenges

    The European Banking Authority (EBA) published an Opinion on the scale and impact of de-risking in European Union and the steps that competent authorities should take to tackle unwarranted de-risking.

    January 05, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7860