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

    OCC Revises Minimum Threshold for Banks to Conduct Stress Tests

    OCC issued the final rule that amends its company-run stress testing requirements under the 12 CFR 46 in Code of Federal Regulations.

    October 10, 2019 WebPage Regulatory News
    News

    US Agencies Update Management Interlock Rules Under DIMIA

    US Agencies (FDIC, FED, and OCC) issued a final rule that increases the thresholds in the major assets prohibition for management interlocks for purposes of the Depository Institution Management Interlocks Act (DIMIA).

    October 10, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Rules to Closely Match Bank Risk Profiles

    US Agencies (OCC, FED, and FDIC) finalized rules that tailor the regulations for domestic and foreign banks to more closely match their risk profiles.

    October 10, 2019 WebPage Regulatory News
    News

    CPMI-IOSCO and FSB on Governance Arrangements for OTC Derivatives

    CPMI and IOSCO published a report that identifies key criteria, functions, and bodies for the governance arrangements.

    October 09, 2019 WebPage Regulatory News
    News

    EIOPA Launches Field Test on Templates Under 2020 Solvency II Review

    EIOPA, as part of the 2020 Solvency II reporting and disclosure review, launched a field test on the revised and newly proposed reporting templates.

    October 09, 2019 WebPage Regulatory News
    News

    US Agencies Adopt Rule on Appraisals for Real Estate Transactions

    US Agencies (FDIC, FED, and OCC) adopted the final rule to amend regulations requiring appraisals of real estate for certain transactions

    October 08, 2019 WebPage Regulatory News
    News

    US Agencies Finalize Amendments to Simplify Volcker Rule

    US Agencies (CFTC, FDIC, FED, OCC, and SEC) finalized amendments to the regulations implementing section 13 of the Bank Holding Company Act, also known as the Volcker Rule.

    October 08, 2019 WebPage Regulatory News
    News

    EC Report Explores Application and Challenges of Blockchain Technology

    The Joint Research Center of EC published a report exploring the challenges and impact of distributed ledger technologies.

    October 08, 2019 WebPage Regulatory News
    News

    BIS and SNB Sign Agreement on Innovation Hub Center in Switzerland

    BIS and SNB signed an operational agreement on the BIS Innovation Hub Center in Switzerland.

    October 08, 2019 WebPage Regulatory News
    News

    ECB Issues Results of Sensitivity Analysis of Liquidity Risk for Banks

    ECB published results of 2019 stress test on sensitivity analysis of liquidity risk.

    October 07, 2019 WebPage Regulatory News
    RESULTS 1 - 10 OF 3958