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Benchmarks Regulation Update

Benchmarks Regulation Update

  • United Kingdom
  • Financial institutions - Asset managers and funds

18-10-2017

With less than three months until the main provisions of the EU’s Benchmarks Regulation (BMR) come into application, firms need to ensure that they are ready for the new rules.

With this in mind, we set out below a number of recent developments and issues for you to consider:

  • ESMA has updated its Q&As and webpage
  • The European Commission has adopted a number of Delegated Regulations
  • ESMA has published a Consultation Paper on guidelines on non-significant benchmarks
  • The FCA has updated its website for firms who wish to apply to become an authorised or registered benchmark administrator

Firms need to identify the extent to which they may be administrators of, contributors to, or users of benchmarks and, in each case, what they will need to do to comply with the new rules.

In particular, investment fund managers need to consider their use of benchmarks and any consequential investor disclosure requirements (including prospectus updates), operational and process changes, contract amendments and the extent to which transitional provisions may be available.

ESMA Q&A and webpage update

On 29 September and 13 October, ESMA updated its Q&A document and webpage, respectively. The Q&A document includes four new questions and answers, two of which relate to the scope of the BMR, including the application of the BMR to EU and third country central banks and the exemption under the BMR for single reference prices. The remaining questions relate to definitions under the BMR, including examples of when firms will be viewed as using a benchmark in relation to a derivative. The webpage has been updated with information on the register of administrators and third country benchmarks as required under Article 36 of the BMR.

European Commission Delegated Regulations

On 29 September, the European Commission adopted three Delegated Regulations dealing with:

On 3 October, the European Commission adopted a fourth Delegated Regulation dealing with establishing the conditions to assess the impact resulting from the cessation of or change to existing benchmarks.

ESMA Consultation Paper on non-significant benchmarks

On 29 September, ESMA published a Consultation Paper setting out draft guidelines for national regulators and market participants. The draft guidelines are designed to ensure common, uniform and consistent application of various aspects of the BMR in relation to non-significant benchmarks.

The draft guidelines cover (i) the oversight function (ii) input data (iii) transparency and (iv) governance and control requirements for supervised contributors.

In addition to any general comments, ESMA seeks comments on seven questions raised in the paper. The consultation closes on 30 November 2017.

FCA website update

The FCA has updated its website for firms who wish to apply to become an authorised or registered benchmark administrator and for third country administrators. Whilst formal applications cannot be submitted before 1 January, benchmark administrators are now able to submit a draft application using the draft applications forms published by the FCA.

How can Eversheds Sutherland help?

The main provisions of the BMR will apply from 1 January 2018 and, with less than three months to go, firms need to ensure that they are ready for the new rules. Firms need to identify the extent to which they may be administrators of, contributors to, or users of benchmarks and what they will need to do to comply with the new rules.

In particular, investment fund managers need to consider their use of benchmarks and any consequential investor disclosure requirements (including prospectus updates), operational and process changes, contract amendments and the extent to which transitional provisions may be available.

Eversheds Sutherland has been considering the issues and advising clients on the requirements of the BMR and the steps clients need to take to ensure compliance. We would be happy to discuss how we can help.

For more information contact

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