Legal & Regulatory News

European Commission publishes feedback on its consultation on the regime applicable to the use of benchmarks administered in a third country

On 10 January 2023, the European Commission released a summary report of the responses received to its consultation on the regime applicable to the use of benchmarks administered in a third country under the EU Benchmarks Regulation (BMR).

The BMR was introduced to improve the robustness of financial benchmarks provided and used in the EU. It includes rules on the use in the EU of benchmarks administered outside the EU, which will become effective on 1 January 2024.

The consultation was launched in May 2022 and closed in August 2022. It received a total of 64 responses. Key points arising from the consultation include:

• Almost three quarters of respondents agreed that rules for third country benchmarks are currently not fit for purpose. Therefore, there is broad support for a fundamental review of the third country chapter of the BMR regime;
• In relation to the criteria for designating strategic benchmarks, respondents indicated a preference for 2 out of the 9 factors suggested in the consultation, namely the 'notional amount / value of assets referencing the benchmark in the EU' and the 'type of benchmark' factors;
• 80% of respondents agreed that the internal scope of the BMR would require amendment along similar lines as the third country rules in order to create a level playing field;
• It was broadly agreed that EU benchmark labels (such as the labels for EU Climate Transition Benchmarks and EU Paris Aligned Benchmarks) should be an open standard with a slight preference for supervision under the European Securities and Markets Authority rather than under an EU administrator; and
• Several respondents stressed the importance of advance notice of rule changes.

The European Commission intends to use the feedback received to  prepare a proposal to review the rules for financial benchmarks administered outside the EU.

Click here to access the summary report of responses.