Featured Product

    FCA Evaluates Effects of Additional Benchmarks in Regulatory Regime

    October 22, 2018

    FCA published a paper (Evaluation Paper 18/2) that evaluates the impact of the Benchmarks (Amendment) Instrument 2015, which brought seven benchmarks into the regulatory and supervisory regime. These seven benchmarks are Sterling Overnight Index Average (SONIA), Repurchase Overnight Index Average (RONIA), International Currency Exchange (ICE) Swap Rate (formerly ISDAFIX), World Markets/Reuters (WM/R) London 4pm Closing Spot Rate, London Bullion Market Association (LBMA) Gold Price, LBMA Silver Price, and ICE Brent Index.

    This paper provides a detailed analysis for each benchmark, summarizes the overall findings of the evaluation, and outlines the main lessons learned. The following are the main findings of the analysis:

    • Most stakeholders believed that the rules made benchmarks more robust to manipulation and more representative of the underlying market, reassuring users about the integrity of the benchmarks.
    • The empirical findings finds that trading costs and liquidity improved for already liquid markets (especially in swap markets).
    • For less liquid markets, the fines, the methodology changes, and regulatory intervention may have increased the perceived regulatory risk, worsening liquidity and participation.

    This evaluation is part of the decision-making framework of the FCA Mission. In April 2015, FCA had proposed a framework outlining the way FCA measures the causal impact of interventions. The framework explains the reasons of doing post-intervention impact evaluations, how FCA chooses specific interventions to study, and how it is ensured that the evaluations are robust, impartial, and credible. This evaluation paper follows the proposed approach to post-intervention impact evaluations. The aim of this work is to understand the impact of the Benchmarks Instrument 2015 on markets and firms’ costs and to understand whether the intervention met its objective of increased benchmark robustness. Through the Benchmarks (Amendment) Instrument 2015, FCA had made amendments to the Handbook (notably in MAR and SUP) and guidance outside the Handbook in the Perimeter Guidance manual (PERG). 

     

    Related Links

    Keywords: Europe, UK, Securities, Benchmarks, Benchmarks Instrument 2015, Evaluation Paper, Regulatory and Supervisory Regime, FCA

    Related Articles
    News

    MAS Concludes Blockchain Payments Prototype Shows Commercial Potential

    MAS and Temasek jointly released a report to mark the successful conclusion of the fifth and final phase of Project Ubin, which focused on building a blockchain-based multi-currency payments network prototype.

    July 13, 2020 WebPage Regulatory News
    News

    EBA Publishes Phase 2 of Technical Package on Reporting Framework 2.10

    EBA published phase 2 of the technical package on the reporting framework 2.10, providing the technical tools and specifications for implementation of EBA reporting requirements.

    July 10, 2020 WebPage Regulatory News
    News

    APRA Updates Reporting Validation Rules in July 2020

    APRA updated the lists of the Direct to APRA (D2A) validation rules for authorized deposit-taking institutions, insurers, and superannuation entities.

    July 10, 2020 WebPage Regulatory News
    News

    PRA to Partly Apply EBA Guidelines on Disclosures for COVID Measures

    PRA updated the statement that provides guidance to regulated firms on implementation of the EBA guidelines on reporting and disclosure of exposures subject to measures applied in response to the COVID-19 crisis.

    July 10, 2020 WebPage Regulatory News
    News

    EBA Updates List of Correlated Currencies Under CRR

    EBA updated the 2019 list of closely correlated currencies that was originally published in December 2013.

    July 10, 2020 WebPage Regulatory News
    News

    FASB Proposes to Delay Implementation of Insurance Contracts Standard

    FASB issued a proposed Accounting Standards Update that would grant insurance companies, adversely affected by the COVID-19 pandemic, an additional year to implement the Accounting Standards Update No. 2018-12 on targeted improvements to accounting for long-duration insurance contracts, or LDTI (Topic 944).

    July 09, 2020 WebPage Regulatory News
    News

    APRA Updates Regulatory Approach to Loan Deferrals Amid COVID Crisis

    APRA updated the regulatory approach for loans subject to repayment deferrals amid the COVID-19 crisis.

    July 09, 2020 WebPage Regulatory News
    News

    BCBS and FSB Set Out Recommendations for Benchmark Transition

    BCBS and FSB published a report on supervisory issues associated with benchmark transition.

    July 09, 2020 WebPage Regulatory News
    News

    IAIS Sets Out Recommendations for Benchmark Transition for Insurers

    IAIS published a report on supervisory issues associated with benchmark transition from an insurance perspective.

    July 09, 2020 WebPage Regulatory News
    News

    ESMA Updates Reporting Manual on European Single Electronic Format

    ESMA updated the reporting manual on the European Single Electronic Format (ESEF).

    July 09, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5469