Benchmarks Reform e Contribuzione ad

Euribor
Benchmark Regulation
6 Ottobre 2021
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Benchmark Reform
The Benchmarks Regulation was published in the European Official Journal on 29
June 2016, and entered into force the following day. It is applicable as of 1
January 2018. What is the
Benchmarks
The Benchmarks Regulation has the following objectives:
Regulation?
• improving governance and controls over the benchmark process, in particular
to ensure that administrators avoid conflicts of interest, or at least manage
them adequately
• improving the quality of input data and methodologies used by benchmark
administrators
• ensuring that contributors to benchmarks and the data they provide are
subject to adequate controls, in particular to avoid conflicts of interest
• protecting consumers and investors through greater transparency and
adequate rights of redress.
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Benchmark Reform

The Benchmarks Regulation will introduce among others requirements with

respect to:
What is the
• the governance of and control by administrators over the benchmark process
ensuring that administrators avoid conflicts of interest and have policies and
Benchmarks
procedures how to manage them adequately. EU entity benchmark
Regulation?
administrators are required to apply for authorization or registration
• the input data used for determining a benchmark
• the methodology used for determining a benchmark
• the code of conduct that an administrator shall have in place for its
contributors
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Benchmark Reform

The Benchmarks Regulation defines an index as any figure:

•that is that is published or made available to the public

•that is regularly determined:
What is an
• entirely or partially by the application of a formula or any other
index?
method of calculation, or by an assessment; and
• on the basis of the value of one or more underlying assets or
prices, including estimated prices, actual or estimated interest
rates, quotes and committed quotes, or other values or surveys.
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Benchmark Reform

An index becomes a benchmark where the index is used:

• to determine the amount payable under a financial instrument or

financial contract, or the value of a financial instrument, or
What is a
• to measure the performance of an investment fund for the purpose
Benckmark?
of:
o tracking the return, or
o defining the asset allocation or a portfolio, or
o computing the performance fees
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Benchmark Reform

Benchmark categorisation

The BMR includes a complicated matrix for the classification of Benchmarks

benchmarks depending on their methodology, risk profiles and the
underlying market that they intend to measure. categorisation
In terms of types of benchmarks, based on the underlying and/or
methodology, the BMR distinguishes commodity benchmarks, interest
rate benchmarks and regulated data benchmarks.

In relation to benchmarks’ risk profile and applying the principle of

proportionality, the BMR categories benchmarks as non-significant,
significant and critical.

The application of select BMR provisions is adjusted in accordance with

a benchmark’s classification.
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Benchmark Reform

Critical benchmarks
Where the value of contracts underlying the benchmark is at least
€500bn, or where a benchmark has been recognised as critical in a
Member State. Benchmarks
Significant benchmarks Defined
Where the value of contracts underlying the benchmark is at least
€50bn, or where there are no or very few market-led substitutes and
there would be an impact on financial stability if the benchmark
ceased to be produced.

Non-significant benchmarks
Where the value of contracts underlying the benchmark is less than
€50bn, and the benchmark is not a commodity or interest rate
benchmark.
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Benchmark Reform
Entities may become a benchmark administrator if they provide indices that are
used in:
• Financial instruments traded on trading venues or via systematic internalisers in
the EU.
• Mortgage or consumer credit contracts, or investment funds.
How the BMR
Entities may become a benchmark contributor under the Regulation if they are an
authorised person and they:
may affect
• Contribute input data that is not readily available to the administrator, and entities:
• Provide the input data for the purpose of a benchmark determiniation.

Entities become a benchmark user and be subject to additional requirements if they

are supervised under MiFID II, CRD IV, UCITS or one of the other EU regulations as
specified in Article 3(1)(17) and they:
• Issue a financial instrument that references an index.
• Determine the amount payable under a financial instrument or a mortgage or
consumer credit contract by referencing an index
• Are a party to a mortgage or consumer credit contract that references an index.
• Provide a borrowing rate calculated as a spread or mark-up over an index or a
combination of indices and that is solely used as a reference in a consumer credit
contract to which the creditor is a party
• Measure the performance of an investment fund through an index either to track
the return of the fund or to define its asset allocation.
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Benchmark Reform

Administrators

Under the BMR, European benchmark administrators are required to

Requirements
apply for authorisation or registration and are subject to supervision by for
the national competent authorities.
Administrators
Upon application for authorisation or registration, the applicant must
demonstrate that their benchmark-setting process and the governance
of their benchmarks complies with the applicable requirements set out
in the BMR.

The BMR governance and control requirements for benchmark

administrators include expansive provisions on conflicts of interest, the
oversight function, control frameworks, accountability and record
keeping requirements, complaints-handling mechanisms, outsourcing,
input data, methodology and reporting of infringements.
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Benchmark Reform

Contributors

The BMR defines contributors as “natural or legal persons contributing

input data”. Requirements
For benchmarks based on the provision of input data by contributors, for
the BMR requires benchmark administrators to develop a code of
conduct, setting out the responsibilities of contributors in relation to input Contributors
data. This includes a description of the relevant input data, provisions
regarding identification of persons that may provide input data, policies
to ensure that a contributor provides all relevant input data, and
systems and controls that a contributor is required to establish. While
codes of conduct are not legally binding, contributors are expected to
adhere to them on a continuous basis.
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Benchmark Reform

Users

Benchmark users that fall within the scope of the BMR need to comply
with specific requirements following from:
Requirements
for benchmark
Article 28(2) BMR - Changes to and cessation of a benchmark
users
This implies that benchmark users need to have robust written plans
setting out the actions that they would take in the event that a
benchmark materially changes or ceases to be provided. Where
feasible and appropriate, such plans shall nominate one or several
alternative benchmarks that could be referenced to substitute the
benchmarks no longer provided, indicating why such benchmarks
would be suitable alternatives. Upon request, the supervised entities
shall provide the relevant competent authority with those plans and any
updates. The plans need to be reflected in the contractual relationship
with clients.
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Benchmark Reform

Article 29 BMR – use of a benchmark

A supervised entity located in the EU may use a benchmark or a

Requirements
combination of benchmarks: (i) if the benchmark is provided by an for benchmark
administrator located in the EU included in the ESMA register or (ii) if the
benchmark is provided by an administrator located outside the EU and users
the benchmark is included in the ESMA register.

ESMA started publishing this list of Administrators and third country

benchmarks on 3 January 2018
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Benchmark Reform

Regulation (EU) 2016/1011 on indices used as benchmarks in financial

instruments and financial contracts or to measure the performance of Source
investment funds and amending Directives 2008/48/EC and 2014/17/EU
and Regulation (EU) No 596/2014: &
https://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:32016R1011 Information
More information on the BMR can be found on the websites of ESMA:

https://www.esma.europa.eu/policy-rules/benchmarks