ESMA published a statement that sets out the impact of Brexit on the ESMA Register for benchmark administrators and third-country benchmarks under the Benchmarks Regulation. The statement highlights that, post Brexit transition, the existing UK administrators will be deleted from the ESMA Register, as, by then, the Benchmarks Regulation will no longer be applicable to the benchmark administrators in UK. ESMA also published a final report setting out the updated regulatory technical standards that contain provisions ensuring that the governance arrangements of benchmark administrators are sufficiently robust and the potential manipulation of benchmarks is minimized, through additional rules on the methodology of calculation and controls to ensure the integrity of the data. These draft standards result from the ESAs Review and are expected to be submitted, by October 01, 2020, to EC, which will have three months in which to approve or reject them.
After the transition period for the withdrawal of UK from EU ends on December 31, 2020, UK administrators (that are included in the ESMA Register) will be deleted from the ESMA Register as the Benchmarks Regulation will by then no longer be applicable to the benchmark administrators in UK. During the Benchmarks Regulation transitional period until December 31, 2021, as defined in Article 51(4) of the Benchmarks Regulation, this change of the ESMA Register would not have an effect on the ability of EU27 supervised entities to use the benchmarks provided by those third-country UK administrators. During the Benchmarks Regulation transitional period, third-country benchmarks can still be used by supervised entities in EU if the benchmark is already used in EU as a reference for financial instruments, financial contracts, or for measuring the performance of an investment fund. Therefore, until December 31, 2021, EU supervised entities can use third-country UK benchmarks even if they are not included in the ESMA Register. This Benchmarks Regulation transitional provision would be applicable to the benchmarks provided by the UK administrators deleted from the ESMA Register because of Brexit.
In the absence of an equivalence decision by EC, UK administrators will have until the end of the Benchmarks Regulation transitional period of December 31, 2021 to apply for recognition or endorsement in EU, for the benchmarks provided by these UK administrators to be included in the ESMA Register again. Similarly, if some UK third-country benchmarks were included in the ESMA Register before the end of the Brexit transition period following a recognition or an endorsement status granted by the UK, those third-country benchmarks will be deleted from the ESMA Register after the end of the Brexit transition period. The Benchmarks Regulation transitional period until December 31, 2021 is also applicable to these third-country benchmarks endorsed or recognized in the UK. Therefore, during the Benchmarks Regulation transitional period, this deletion from the ESMA Register would not have an effect on the ability of EU27 supervised entities to use those third-country benchmarks that were endorsed or recognized in the UK before the end of the Brexit transition period. In the absence of an equivalence decision by EC, these third-country benchmarks previously endorsed or recognized in the UK will have until the end of the Benchmarks Regulation transitional period of December 31, 2021 to apply again for recognition or endorsement in EU, to be included in the ESMA Register.
- Press Release on Impact of Brexit
- Statement on Impact of Brexit (PDF)
- Press Release on Technical Standards
- Report on Technical Standards
Keywords: Europe, EU, UK, Banking, Securities, Transition Period, Third Country Benchmarks, Regulatory Technical Standards, Benchmarks Regulation, ESMA
Previous ArticleEIB Provides Guarantee to Commerzbank to Support SMEs Amid Crisis
Next ArticleESRB Publishes Risk Dashboard in October 2020
APRA issued a letter on the loss-absorbing capacity (LAC) requirements for domestic systemically important banks (D-SIBs) and published a discussion paper, along with the proposed the prudential standards on financial contingency planning (CPS 190) and resolution planning (CPS 900).
The European Commission (EC) launched a call for evidence, until March 18, 2022, as part of a comprehensive review of the macro-prudential rules for the banking sector under the Capital Requirements Regulation (CRR) and Directive (CRD IV).
The Financial Stability Board (FSB) published a report that sets out good practices for crisis management groups.
The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.
The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.
Through a letter addressed to the banking sector entities, the Office of the Superintendent of Financial Institutions (OSFI) announced deferral of the domestic implementation of the final Basel III reforms from the first to the second quarter of 2023.
EIOPA recently published a letter in which EC is informing the European Parliament and Council that it could not adopt the set of draft regulatory technical standards for disclosures under the Sustainable Finance Disclosure Regulation (SFDR) within the stipulated three-month period, given their length and technical detail.
The Financial Conduct Authority (FCA) published the third in a series of policy statements that set out rules to introduce the UK Investment Firm Prudential Regime (IFPR), which will take effect on January 01, 2022.
The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.
The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.