On 13 December 2024, the Financial Conduct Authority (FCA) issued its latest Dear CEO letter to benchmark administrators.
The letter is the third such letter the FCA has issued to benchmark administrators and it reflects the FCA’s views on the key risks the regulator has identified in the portfolio, its expectations and a summary of the work it intends to do over the next two years.
The supervisory priorities discussed in the letter cover four headings:
- Corporate governance and oversight.
- Data quality controls.
- Benchmark controls.
- Disclosures.
- Operational resilience.
The letter also notes that the Wholesale Data Market Study report published earlier this year identified several issues that may limit effective competition within the benchmarks market. As noted in the report, the FCA will look at these issues holistically as part of the wider regulatory work in wholesale financial markets and alongside international developments. Where appropriate, it will address the issues as part of, or following, the review of the UK Benchmarks Regulation, and by tackling firm specific issues using other tools such as its powers under the Competition Act 1998.
Next steps
CEOs are expected to discuss the content of the letter with their senior management and be able to demonstrate their plans to address the expectations set out in it, if asked.