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

    ECB Allows Temporary Relief in Leverage Ratio Amid COVID-19 Pandemic

    ECB published a decision allowing the euro area banks under its direct supervision to exclude certain central bank exposures from the leverage ratio.

    September 21, 2020 WebPage Regulatory News
    News

    ESAs Launch Survey on Templates for Product Disclosures Under SFDR

    ESAs launched a survey seeking feedback on the presentational aspects of product templates under the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088).

    September 21, 2020 WebPage Regulatory News
    News

    ECB Proposes Integrated Reporting Framework to Reduce Burden for Banks

    ECB published input of the European System of Central Banks (ESCB) into the EBA feasibility report on reducing the reporting burden for banks in EU.

    September 21, 2020 WebPage Regulatory News
    News

    ECB Finalizes Methodology to Assess CCR and A-CVA Risk of Banks

    ECB finalized the guide on assessment methodology for the internal model method for calculating exposure to counterparty credit risk (CCR) and the advanced method for own funds requirements for credit valuation adjustment (A-CVA) risk.

    September 18, 2020 WebPage Regulatory News
    News

    EBA Provides Opinion on Definition of Credit Institution in CRR

    EBA published an Opinion addressed to EC to raise awareness about the opportunity to clarify certain issues related to the definition of credit institution in the upcoming review of the Capital Requirements Directive and Regulation (CRD and CRR).

    September 18, 2020 WebPage Regulatory News
    News

    APRA Consults on Alignment of Daily Liquidity Report for Banks

    APRA is consulting on updates to ARS 210.0, the reporting standard that sets out requirements for provision of information on liquidity and funding of an authorized deposit-taking institution.

    September 17, 2020 WebPage Regulatory News
    News

    FED Releases Scenarios for Second Round of Stress Tests on Banks

    FED released hypothetical scenarios for a second round of stress tests for banks.

    September 17, 2020 WebPage Regulatory News
    News

    FED to Temporarily Revise FR Y-14 Reports to Conduct Stressed Analysis

    FED is proposing to temporarily revise the capital assessments and stress testing reports (FR Y-14A/Q/M) to implement the changes necessary to conduct stressed analysis in connection with the re-submission of capital plans, using data as of June 30, 2020.

    September 17, 2020 WebPage Regulatory News
    News

    FED Revises Information Collection Under Market Risk Capital Rule

    FED adopted a proposal to extend for three years, with revision, the information collection under the market risk capital rule (FR 4201; OMB No. 7100-0314).

    September 17, 2020 WebPage Regulatory News
    News

    EBA Seeks Input on ESG Disclosure Practices of Banks

    EBA published a voluntary online survey seeking input from credit institutions on their practices and future plans for Pillar 3 disclosures on the environmental, social, and governance (ESG) risks.

    September 17, 2020 WebPage Regulatory News
    RESULTS 1 - 10 OF 5809