The Council of the EU, the European Parliament and the European Commission have reached agreement on the proposed Regulation on financial benchmarks.
The Regulation is intended to contribute to the accuracy and integrity of benchmarks used in financial instruments and financial contracts by:
- ensuring that benchmark administrators are subject to prior authorisation and supervision depending on the type of benchmark (e.g. commodity or interest rate benchmarks);
- improving their governance (e.g. management of conflicts of interest) and requiring greater transparency on how a benchmark is produced; and
- ensuring the appropriate supervision of critical benchmarks, such as EURIBOR/LIBOR, the failure of which might create risks for market participants and for the functioning and integrity of markets.
The press release issued by the Luxembourg Presidency of the Council of the EU notes that a compromise was reached on the third country regime, which will allow third country indices to continue being used in the EU, namely through newly set-up “recognition” or “endorsement” regimes, while ensuring that European benchmark administrators will not be disadvantaged vis-à-vis their non-European competitors.
The political agreement is to be formalised by Member States at the meeting of the Permanent Representatives Committee on 9 December 2015.
View Financial benchmarks: Commission welcomes agreement on new rules to prevent manipulation, 25 November 2015