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Benchmarks Regulation Enters UK Law

The EU’s Benchmarks Regulation (BMR) has reached a new critical phase, as jurisdictions across the EU start to translate the Regulation into national law. BMR was created by the EU to crack down on the manipulation of benchmarks and rates, and ushers in a stringent compliance and reporting regime for benchmark administrators, contributors and users.

The UK is one of the first EU jurisdictions to integrate BMR into its national laws, which it did by passing the Financial Services and Markets Act 2000 (Benchmarks) Regulations 2018 on February 27. As per BMR, certain provisions of the new UK Regulations will only come into force on July 1, 2018 and transitional provisions apply until May 1, 2020. The UK has also used this law to appoint the Financial Conduct Authority (FCA) as its competent authority, under BMR.

This latest development is another important milestone in the implementation of BMR in Europe. This Regulation will have a transformational effect on the benchmarks landscape in Europe – and beyond: administrators in third-party jurisdictions will have to meet equivalent standards of oversight for their benchmarks to remain in use in the EU.

Our concern, however, is that benchmark administrators and users alike may struggle to achieve BMR compliance. This is due to the existing regulatory burdens that financial sector firms are under pressure to meet, such as MiFID II and MAR. The current workload being placed on the compliance teams in financial sector businesses is unprecedented, and firms need all the help they can get to meet their regulatory obligations.

Under these conditions, the managed services approach to regulatory compliance is proving to be best in terms of ease of implementation and cost. Rather than continually having to rebuild internal compliance systems each time a new regulation emerges, cloud-based RegTech services allow firms to take compliance tools and processes as-a-service that are managed by regulatory experts and kept up-to-date with current regulatory requirements. Moreover, these services can be integrated into existing systems with ease, removing the need for complex and costly IT projects and enabling firms to achieve compliance in the shortest timeframe possible.

Whichever path financial sector firms choose to take to achieve BMR compliance, it’s now clear that they must act soon: the wider market is already beginning to change.
BMR and other regulatory topics will be discussed at RIMES’ upcoming EMEA Client Conference, which will take place in London on May 2. To register, email events@rimes.com.

 

 

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