The consultation highlights the potential consequences if legacy contracts are not amended or if market participants are not operationally ready to use €STR. It also deals with the Benchmark Regulation (BMR) requirement of including fall-back clauses in contracts referencing benchmarks (BMR Article 28.2).

The European Securities and Markets Authority (ESMA) is part of the working group and encourages stakeholders to provide feedback by 12 of June.

The new Q&A provide clarification on provisions of the BMR regarding the scope of application of the Commission Delegated Regulations adopted under the BMR depending on the type of benchmark and in particular:

·         Regulated-data benchmarks;

·         Interest-rate benchmarks; and

·         Commodity benchmarks.

The purpose of this document is to promote common supervisory approaches and practices in the application of the BMR. It provides responses to questions posed by the general public, market participants and competent authorities in relation to the practical application of the BMR. The content of this document is aimed at competent authorities under the Regulation to ensure that in their supervisory activities their actions are converging along the lines of the responses adopted by ESMA. It also provides guidance to market participants by providing clarity on the BMR requirements.

The final report proposes lighter requirements for non-significant benchmarks, their administrators and their supervised contributors in relation to four areas:

• procedures, characteristics and positioning of oversight function;
• appropriateness and verifiability of input data;
• transparency of methodology; and
• governance and control requirements for supervised contributors.

The first three areas are applicable to administrators of non-significant benchmarks while the fourth one is directly applicable to supervised contributors to non-significant benchmarks.

Background

The BMR introduces a regime for benchmark administrators within the European Union that ensures the accuracy and integrity of benchmarks.

The updated BMR Q&As provide new clarifications regarding the following topic: 

• Methodology and input data: parameters to be considered as input data

The purpose of these Q&As is to promote common supervisory approaches and practices in the application of BMR. It aims at providing investors and other market participants with clarifications on the applicable requirements. ESMA will periodically review these Q&As and update them where required.

Background

In accordance with Article 36 of the Benchmarks Regulation, ESMA started publishing the list of benchmark administrators and third country benchmarks on 3 January 2018 (ESMA’s first working day of 2018). So far, ESMA has published the latest register information on its website daily (ESMA working days) and has made it available for download in csv format.

As of 7 September 2018, the public register interface has become available under https://registers.esma.europa.eu/publication/ . As for all ESMA registers, the portal offers machine-to-machine services to large scale organisations, including a set of web services for retrieval of data maintained in ESMA Registers repositories. For more information, please refer to https://registers.esma.europa.eu/publication/helpApp

The speech focused on the development and future of benchmarks regulation in the European Union.