Trade Associations Recommend Reforms to EU Benchmarks Regulation

In connection with the European Commission's review of the European Union Benchmarks Regulation (the "BMR"), ISDA, the Asia Securities Industry and Financial Markets Association (or "ASIFMA"), FIA, the Global Foreign Exchange Division (or "GFXD") and the Global Financial Markets Association (or "GFMA") (collectively, the "Associations") recommended significant reforms to the BMR.

The Associations urged EU regulators to allow the use of benchmarks by institutional investors unless specifically prohibited. This recommendation would reverse the general prohibition in the BMR against the use of a benchmark that has not been specifically authorized.

The Associations proposed several other improvements to be made to the BMR regime, including:

  • designating a central authority (e.g., the European Commission (or "EC")) or the European Securities Markets Authority (or "ESMA") to regulate benchmarks deemed systemically important to EU investors;

  • permitting non-EU benchmark administrators to obtain authorization from an appropriate central authority;

  • providing exemptions for (i) non-significant benchmarks, from mandatory designation, and (ii) EU significant benchmarks, also from mandatory designation, in order to align BMR with the global scope of benchmark regulation, and (iii) public policy benchmarks and regulated data benchmarks;

  • implementing a voluntary labeling regime to permit administrators to comply with the BMR, and market their benchmarks as BMR-compliant;

  • empowering regulators to block the acquisition of new exposures to benchmarks that fail to comply with the BMR, but still to permit the use of such benchmarks for managing legacy exposures; and

  • providing end users with increased visibility on whether benchmarks have qualified for use.

Premium Content

Available only to Premium subscribers.

 

Tags