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27 May 2016

The European Securities and Markets Authority (ESMA) has today published a Consultation Paper (CP) on draft implementing measures regarding the Benchmarks Regulation (BR).

ESMA is seeking stakeholder’s input on draft Technical Advice (TA) it is supposed to develop in order to detail the implementation of the incoming BR which was introduced following the rigging of different market benchmarks such as Libor. The CP is seeking stakeholder’s feedback on the proposes regulatory framework for benchmarks, including in the following key areas:

  • Definition of Benchmarks;
  • Measurement of the use of critical and significant benchmarks;
  • Criteria for the identification of critical benchmarks;
  • Endorsement of a benchmark / family of benchmarks provided in a third countries; and
  • transitional provisions.

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 proposes BR regime aims 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.

Next steps

ESMA CP is open until 30 June 2016. A separate consultation will be held on the Technical Standards (TS) ESMA has to develop under the BR. ESMA will use the feedback received to finalise its TA in time for the deadline defined within the mandate received by the European Commission, i.e. four months after the entry into force of the Benchmarks Regulation.