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    EC Consults on Review of Regulation on Financial Benchmark Indices

    October 11, 2019

    EC launched a consultation on review of the EU Benchmark Regulation, with the intent to gather stakeholder feedback on functioning of the benchmarks regime, two years after its entry into application. The consultation focuses primarily on the regime for critical benchmarks and the effectiveness of the mechanism for authorization and registration of EU benchmark administrators. A couple of broader topics have been also explored—namely, the categorization of benchmarks and the rules for third-country benchmarks. The consultation ends on December 06, 2019.

    The EC consultation is seeking views on various aspects of the reference regime, including the following:

    • The powers of the competent authorities with respect to critical benchmarks and their powers to withdraw or suspend the authorization or registration of an administrator
    • Whether the current supervisory framework for critical benchmarks is appropriate and whether the regulatory framework for non-material benchmarks and indices with regulated data is correctly calibrated
    • How to deal with benchmarks that are not significant in terms of their use in the Union or certain types of benchmarks that are less prone to manipulation such as regulated data benchmarks
    • The operation of the ESMA Register of Administrators, requesting a call for contributions on the measures applicable to climate indices, commodity indices, and indices of third countries 
    • Whether the set of supervisory powers is sufficient to ensure an effective supervision of the new climate-related benchmarks

    The Benchmark Regulation has been in application since January 01, 2018. Administrators of EU benchmarks have to apply for authorization or registration by January 01, 2020. For the administrators of critical benchmarks and third-country benchmarks, the transitional period expires on December 31, 2021. According to Article 54 of the Benchmark Regulation, EC must review and submit a report to the European Parliament and the Council on the Benchmark Regulation by January 01, 2020. In addition, subsequent to the political agreement on climate-related benchmarks, EC will be required to submit, by April 01, 2020, a report on the operation of third-country benchmarks in EU, including on the recourse that third-country benchmark administrators have had to endorsement, recognition, or equivalence. This report will have to analyze the consequences of the extension of the transitional period for the critical and the third-country benchmarks until December 31, 2021.  On the basis of the responses received, EC will prepare the report to the European Parliament and Council.

     

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    Comment Due Date: December 06, 2019

    Keywords: Europe, EU, Banking, Securities, Benchmarks Regulation, Critical Benchmarks, Climate-Related Benchmarks, Interest Rate Benchmarks, IBOR, ESMA Register, EC

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