On 29 June 2016, the Benchmarks Regulation (BMR) was published in the Official Journal of the EU. Most of the provisions of the BMR apply from 1 January 2018. The BMR requires the European Securities and Markets Authority (ESMA) to develop a number of draft technical standards to be submitted to the European Commission by 1 April 2017.

On 15 February 2016, ESMA published a Discussion Paper that included the European Supervisory Authority’s policy orientations and initial proposals for both the draft technical standards and the technical advice to the Commission.

ESMA has now published a Consultation Paper that follows up on the earlier Discussion Paper setting out the draft technical standards. The Consultation Paper has 10 chapters, each dedicated to one of the areas for which the BMR has requested ESMA to develop draft technical standards:

  1. procedures, characteristics and positioning of oversight function;
  2. appropriateness and verifiability of input data;
  3. transparency of methodology;
  4. specification of elements of the code of conduct of contributors;
  5. governance and control requirements for supervised contributors;
  6. specification of qualitative criteria for significant benchmarks;
  7. template for compliance statement for significant/non-significant benchmarks;
  8. contents of benchmark statement;
  9. information to be provided in applications for authorisation and registration; and
  10. form and content for the application for recognition by third country administrators.

Each chapter summarises the relevant provisions and their objectives, provides an explanation of the related policy issues and references to the relevant responses received to the earlier Discussion Paper. The Consultation Paper also includes a first version of each draft technical standard.

The draft technical standard for the procedures and characteristics of the oversight function includes a non-exhaustive list of governance arrangement of the oversight function, composed by six types of arrangements. Although the list is non-exhaustive, ESMA believes that it should represent a very useful tool for administrators in order to define the structure of their oversight function appropriate to their benchmarks. In particular, the list defines a spectrum of possible structures of oversight functions that goes from a basic form, in which the oversight function is composed by a single natural person, to a structured form where a function is composed of multiple committees performing a subset of the oversight tasks. Administrators of multiple critical benchmarks will be able to decide whether each critical benchmark would need a separate committee or not operating within the overall structure of the oversight function.

The deadline for responding to the consultation paper is 2 December 2016.

ESMA will consider the feedback to the consultation and finalise the draft technical standards in order to submit them to the European Commission by 1 April 2017.

View ESMA consults on future rules for financial benchmarks, 29 September 2016

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