The Financial Conduct Authority (FCA) announced on December 1 that access to the new UK Benchmarks Register will be provided from 11:00 on December 31, 2020. Even accepting that normal New Year’s Eve festivities may be somewhat muted this year, it’s probably unlikely that the FCA’s website will crash under the weight of demand – although admittedly there’s a great deal of curiosity as to what the Register will look like, given that the FCA has not yet provided full details about its structure.
The end of the year can be a moment of reflection; planning new activities for the year ahead as well as taking stock of things that got overlooked or could have been done better in the year past. The FCA’s announcement is a reminder about one of those tricky things that might well have got pushed to one side, namely, making plans to deal with what 2021 holds in store for users of benchmarks administered in the UK.
The moment the UK Benchmarks Register opens at the stroke of midnight in Brussels, UK administrators will be deleted from the Register of Administrators and Third-country Benchmarks administered by the European Securities and Markets Authority (ESMA).
UK administrators that were originally included in the ESMA register as EU administrators, will, after the end of the Brexit transition period, qualify as third-country administrators for EU users. UK administrators will have until the end of the Benchmark Regulations (BMR) transitional period on December 31, 2021 to apply for recognition or endorsement in the EU in order for the benchmarks provided by these UK administrators to be readmitted into the ESMA Register.
EU entities will be able to treat UK administrators as third-country benchmark providers in the interim period up to the end of 2021. Similarly, UK users can treat EU administrators as third-country providers up until December 31, 2022 (or possibly until December 2025 if Treasury proposals are implemented).
Simon Green, Head of Compliance at RIMES, comments: “The question remains for users of UK administered benchmarks in 2021 and beyond: which benchmarks are eligible for use under BMR? Even ignoring the fact that the UK and EU registers will not include details of which individual benchmarks, or benchmark families, are registered by each individual administrator, users in the UK will potentially have to check two regulatory databases to even begin to work out whether they’re compliant.
“Benchmark regulation has always been a minefield to navigate. The big change that will occur on December 31 will make successful navigation that much harder to achieve. The headache that many benchmark users may wake up to in the New Year will not solely relate to over-indulgence the night before. Fortunately, relief from benchmark related pain is available through the resources of third-party data providers. As firms get to grips with increasing complexity in the year ahead, RIMES’ award-winning RegFocus BMR suite of services can help make the task easier by providing users with the information they need to be confident of meeting BMR requirements.”
Contact us to receive more information about RegFocus® BMR, the most advanced benchmarks validation solution on the market, which solves all regulatory obligations under the new Benchmarks Regulation.
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