EUROPEAN UNION: ESMA Consults on Implementation of the Benchmarks Regulation

Monday February 15 2016

The European Securities and Markets Authority (ESMA) has today published a Discussion Paper (DP) regarding the technical implementation of the incoming Benchmarks Regulation (BR). ESMA is seeking stakeholder’s input to inform its future proposals on draft Regulatory Technical Standards (RTS) and Technical Advice (TA) to the European Commission.

Benchmarks are used in financial markets as a reference to price financial instruments and to measure performance of investment funds, as well as being an important element of many financial contracts and their integrity is critical to financial markets and to investors in particular. The BR’s objective is to improve the governance and control over the benchmark process, thereby ensuring their reliability and protecting users. The changes aim to:

• improve the quality of the input data and methodologies used by benchmark administrators;
• ensure that benchmark contributors provide adequate data and are subject to proper controls; and
• ensure the supervision and viability of critical benchmarks.

The DP is seeking stakeholder’s feedback in the following areas:

• definition of benchmarks;
• requirements for the benchmark oversight function;
• requirements for the benchmark input data;
• governance and control requirements for supervised benchmark contributors;
• authorisation and registration of an administrator; and
• transparency requirements regarding the benchmark methodology.

The exact date when the Benchmarks Regulation will enter into force is still unknown as it has not yet been published in the Official Journal of the EU.

Click on the link above for further details.