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ESMA’s Benchmarks Register – The Current State of Play

As part of its oversight duties with regards to the EU Benchmarks Regulation (BMR), the European Securities and Markets Authority (ESMA) has published a list of EU-based benchmark Administrators which have been authorized or registered under the Regulation. The list is comprised of information provided by the national competent authorities of member states.

Concurrently, ESMA has published a list of benchmarks from third-party jurisdictions that comply with relevant conditions laid down in BMR and have therefore acquired recognition under the Regulation. This Register provides supervised entities with a list of non-EU benchmarks which are permitted for use in the Union.

BMR came into force in January this year and has established a stringent regulatory regime to ensure the accuracy and integrity of benchmarks used in financial instruments and contracts in the EU. Administrators that wish to continue issuing benchmarks under BMR must choose between the two status types: authorization (typically for administrators of ‘Critical’ or ‘Significant’ benchmarks, commodity benchmarks or interest rate benchmarks) and registration (typically for ‘supervised entities’ such as banks, credit institutions, investment firms, UCITS, management companies, AIFMs, etc.).

Currently, the Register of EU benchmark Administrators runs to eight organizations that have been registered under BMR through the UK’s Financial Conduct Authority (FCA):

• Cboe Europe
• Citigroup Global Markets
• Elston Consulting
• Foxberry
• Indextus
• NEX Data Services
• New Change Currency Consultants
• WMBA

A further two organizations have been authorized under the Regulation by the FCA:

• ICE Benchmark Administration
• MSCI

The EU is currently running a period of grace for benchmarks that were in use prior to June 30, 2016. However, with this set to end in January 2020, benchmark Administrators should waste no time in registering with their national competent authority or seeking authorization, as appropriate. The FCA has published useful advice for Administrators that are uncertain which path is most suitable for them.

At present, no benchmarks have been listed on ESMA’s Register of approved third-country benchmarks. There is a danger that benchmark Administrators in locations such as the US or APAC may choose simply to withdraw benchmarks, rather than go through the process of seeking approval for use in the EU.

This provides benchmark Users with a significant challenge, as BMR demands that such Users only use benchmarks compliant with BMR and that they maintain a list of substitute benchmarks in the event a benchmark is withdrawn. To help firms stay on top of the fast-changing benchmarks landscape and ensure they are compliant no matter what, RIMES offers RegFocus℠ BMR Control, an award-winning benchmark inventory management, enrichment and control platform. The service includes a feature-rich inventory management system for users to gain an immediate understanding of the universe of benchmarks used at their firm and helps firms understand whether they are considered as Administrators, Contributors or Users under BMR.

RIMES will be discussing other regulatory developments at its upcoming RegTech Market Surveillance Conference, which will take place in New York on June 13. To register, email events@rimes.com.

 

 

The content provided in these articles is intended solely for general information purposes, and is provided with the understanding that the authors and publishers are not herein engaged in rendering regulatory or other professional advice or services. Consequently, any use of this information should be done only in consultation with qualified legal counsel. The information in these articles was posted with reasonable care and attention. However, it is possible that some information in these articles is incomplete, incorrect, or inapplicable to particular circumstances or conditions. We do not accept liability for direct or indirect losses resulting from using, relying or acting upon information in these articles.

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