The previous Benchmarks Regulation (BMR) white paper published by RIMES in January 2018 provided a summary of the key requirements of the BMR requirements. Two years later, and over three and a half years after BMR came into force in June 2016, the regulations should by now be reflected and embedded in the procedures and controls of all regulated firms that use benchmarks in any capacity.
However, despite the long gestation period for the implementation of this legislation, firms could be forgiven for experiencing a sense of confusion about which parts of the BMR are fully in force, given its staggered and prolonged introduction, not to mention the further delay to implementing some important aspects of the requirements for third country administrators and for critical benchmarks.
This paper summarises the current position for this legislation and considers some of the challenges ahead as well as providing our thoughts on how compliance with BMR might be considered by a third-party reviewer, along with providing answers to some questions that firms might have in a Q&A section.
- What areas would you expect a regulator like FCA to focus on when reviewing BMR compliance as part of normal firm supervision or as part of a thematic review?
- We have a written plan in accordance with Article 28(2) of BMR; how do we assess whether this is sufficiently robust?
- We are users of benchmarks created by third country providers, several of which were created after 1st January 2020; are we able to use the new benchmarks?
- Does the extension of the requirement for third country administrators to be authorised to 31 December 2021 means that we have nothing to do in relation to due diligence around third country providers until 2022?
- ESMA publishes a register of approved administrators; are firms able to use this to demonstrate that all the benchmarks provided by these administrators can be used?
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