The EU Benchmarks Regulation (BMR) came into force in June 2016. However, some three and a half years later, it’s easy to see why some firms may still struggle to understand exactly what elements of the regulation are in force.
In part, this confusion arises from the prolonged and staggered implementation of the regulation and delays in implementing aspects of it, such as some of the rules relating to third-country and critical benchmarks. External issues have added to this confusion, not least Brexit.
BMR has also proved something of a moving target. Just this month, in its response to the European Commission’s Consultation on the review of the Benchmark Regulation, the European Securities and Markets Authority (ESMA) raised the possibility of significant changes both to the scope of the regulation and how it is overseen and administered. Everything from the regulation of non-significant benchmarks to the powers of National Competent Authorities (NCAs) appears to still be in flux.
To help provide clarity around BMR, RIMES has updated our Benchmarks Regulation Whitepaper. As we maintain the largest global coverage of benchmarks data of any provider, we’ve made it our business to keep on top of the fast-changing situation. Updates include:
- Brexit: a temporary permissions regime will enable relevant firms and funds which passport into the UK to continue operating in the UK for a limited period after the end of the implementation period in December 2020.
- Third-country administrators: the requirement for third-country administrators to be approved for use by EU firms has been extended to December 31, 2021. To date, little progress has been made by third-country administrators or NCAs.
- Critical benchmarks: the deadline to replace two critical benchmarks, EURIBOR and EONIA has also been extended to December 31, 2021.
The main takeaway for firms is that BMR now applies fully to benchmarks administered within the UK and the EU. Therefore, regardless of extensions to some aspects of BMR, firms may be liable to severe penalties for non-compliance.
Andrew Barnett, Global Head of Product Strategy at RIMES, commented: “alignment with any regulation is difficult, let alone one as complex as BMR. At RIMES, we look to insulate clients from that complexity. Through RIMES Online, for example, clients can now conduct real-time assessments of their BMR compliance, with the ability to search and discover BMR status across 3.5 million benchmarks.”
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