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Topic: Benchmarks

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ESMA speech – A supervisory perspective on the interest rate benchmarks reform

On 14 December 2020, the chair of the European Securities and Markets Authority (ESMA), Steven Maijoor, delivered a speech at the third roundtable on euro risk-free rates. Key points in the speech include: In one year from now, ESMA will substitute the Belgian FSMA as supervisor of EURIBOR administrator, EMMI. The FSMA has already authorised … Continue Reading

New UK Benchmarks Register

On 2 December 2020, the FCA published a new webpage concerning its new UK Benchmarks Register which will replace the ESMA Register for UK supervised users, and UK and third country-based benchmark administrators that want their benchmarks to be used in the UK. The new UK Benchmarks Register will be accessible from 11pm on 31 … Continue Reading

European legislators agree amendments to BMR

On Monday, 30 November 2020, European legislators reached an agreement on the amendments to European Benchmarks Regulation (link), which were proposed by the European Commission in July 2020 (please see our update  note).  The trilogue agreement was announced in the press release issued by the European Parliament. Key points of the final agreement include: Mandatory … Continue Reading

Benchmarks: EU and UK regulatory outlook: Overview of upcoming requirements and legislative developments

The provision of benchmarks is a regulated activity in the European Union (EU) and in the United Kingdom (UK). The legal framework governing the provision and use of benchmarks is set out in the Benchmarks Regulation (BMR) that introduces an obligation for European and UK benchmark administrators to be authorized or registered if they wish … Continue Reading

ESMA updates Q&As on Benchmarks Regulation

On 6 November 2020, the European Securities and Markets Authority (ESMA) updated its Q&As on the Benchmarks Regulation. ESMA has updated section 9.4 of the Q&As dealing with transitional provisions and critical benchmarks by adding a new Q&A that answers the following question: For how long a critical benchmark can be used by supervised entities … Continue Reading

ECON Committee publishes draft report on Benchmarks Regulation review

Following the adoption of the Council general approach on the Commission’s proposal for a Regulation amending the Benchmarks Regulation ((EU) 2016/1011) as regards the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation on 7 October 2020, the European Parliament Economic and Monetary Affairs (ECON) … Continue Reading

Council reaches common position on Benchmarks Regulation review

Representatives from Member States have reached a compromise on the Commission’s proposal for a Regulation amending the Benchmarks Regulation ((EU) 2016/1011) as regards the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation. The Council general approach was adopted following a ‘silence procedure’ on the … Continue Reading

ESMA updates RTS under the Benchmarks Regulation

On 29 September 2020, the European Securities and Markets Authority (ESMA) published a final report containing new sets of draft regulatory technical standards (RTS) under the Benchmarks Regulation (BMR). The ESMA final report has five chapters covering each of the areas for which ESMA is required to develop draft RTS (see below). Each chapter provides … Continue Reading

ESMA consults on fees for benchmarks administrators under BMR

On 25 September 2020, the European Securities and Markets Authority (ESMA) issued a consultation paper on fees for benchmarks administrators under the Benchmarks Regulation (BMR). Article 5 of the BMR (as amended) provides ESMA with new direct supervisory powers. In particular, the amended BMR designates ESMA as the competent authority of both administrators of critical … Continue Reading

Working Group on Sterling Risk-Free Reference Rates issues recommendations on conventions to support the use of SONIA in loan markets for Sterling Bilateral and Syndicated Facilities (September 2020)

The recommendations reiterate that market participants should be ready to offer non-LIBOR loans’ products by end Q3 2020. SONIA compounded in arrears remains the Working Group’s recommended alternative to Sterling LIBOR and the intent of the recommendations is to enable and expedite the transition away from the use of LIBOR based products for the loan … Continue Reading

Minutes of the Working Group on Sterling Risk-Free Reference Rates (23 June 2020)

On 4 September 2020, the Bank of England published the minutes from a virtual meeting of the Working Group on Sterling Risk-Free Reference Rates held on 23 June 2020. Among other things the minutes cover the impact of COVID-19 on the transition and expectations on Q1 2021 milestone for significant reduction of legacy LIBOR exposures. … Continue Reading

Commission publishes targeted amendments to the Benchmarks Regulation

On 24 July 2020, the European Commission published proposed targeted amendments to the EU Benchmarks Regulation (BMR) in light of the fact that the London Interbank Offered Rate (LIBOR) is expected to be phased out by the end of 2021. As there will be contracts and financial instruments referencing LIBOR still in place at the … Continue Reading

Amending the transitional period for third country benchmarks in the UK

On 22 July 2020, HM Treasury issued a policy paper explaining the government’s rationale for extending the transitional period for third country benchmarks under the UK Benchmarks Regulation to 31 December 2025. The EU Benchmarks Regulation (BMR) has directly applied in the UK since 1 January 2018. To ensure that the existing regime continues to … Continue Reading

Commission adopts Delegated Regulations supplementing the BMR

On 22 July 2020, the European Commission adopted the following Delegated Regulations supplementing the Benchmarks Regulation on sustainable finance issues: Commission Delegated Regulation (EU) of 17.7.2020 supplementing Regulation (EU) 2016/1011 of the European Parliament and of the Council as regards minimum standards for EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks. The objective of this … Continue Reading

FSB statement on the impact of COVID-19 on global benchmark reform

On 1 July 2020, the Financial Stability Board (FSB) issued a statement concerning the impact of the COVID-19 pandemic on global benchmark transition. The statement notes that it is likely that some firms’ transition plans are likely to be temporarily disrupted or delayed, whilst others are continuing. The FSB maintains its view that financial and … Continue Reading

Supporting Risk-Free Rate transition through the provision of compounded SONIA

On 26 February 2020, the Bank of England (BoE) published a discussion paper ‘Supporting Risk-Free Rate transition through the provisions of compounded SONIA’. In this discussion paper the BoE requested views from sterling market participants in relation to: the BoE’s intention to publish a daily SONIA Compounded Index; and the usefulness of the BoE publishing … Continue Reading

The Prudential Regulation Authority publish statement on on prioritisation in light of Covid-19

The Prudential Regulation Authority (PRA) has published a statement today on the prioritisation of its work in light of the COVID-19 pandemic. The statement sets out further details of the Prudential Regulation Authority’s plans to help firms maintain their safety and soundness and deliver the critical functions they provide to the economy. Accordingly, the statement … Continue Reading

ESMA issues no action letter on the new ESG disclosure requirements under the BMR

On 29 April 2020, the European Securities and Markets Authority (ESMA) issued a no action letter intended to promote coordinated action by Member State national competent authorities (NCAs) regarding the new environmental, social and governance (ESG) disclosure requirements for benchmark administrators under the Benchmarks Regulation (BMR). ESMA has also issued an opinion to the European … Continue Reading

ISDA announces preliminary results of second consultation on pre-cessation fallbacks

On 16 April 2019, ISDA announced the preliminary results of its consultation on the implementation of pre-cessation fallbacks for derivatives referencing LIBOR. The consultation, commenced in February 2020, invited feedback from market participants on whether a pre-cessation trigger should be included in ISDA standard documents in addition to the permanent cessation fallbacks that ISDA is … Continue Reading

International Accounting Standards Board consults on interest rate benchmark reform changes

The International Accounting Standards Board  (IASB) has announced a consultation on proposed amendments to the International Financial Reporting Standards (IFRS) Standards to assist companies in providing useful information to investors about the effects of interest rate benchmark reform on financial statements. The IASB has split its work on interest rate benchmark reform on financial reporting … Continue Reading

ESMA promotes coordinated action regarding benchmarks external audit requirements

On 9 April 2020, the European Securities and Markets Authority (ESMA) issued a public statement intended to promote coordinated action by Member State national competent authorities (NCAs) regarding the timeliness of fulfilling external audit requirements for interest rate benchmark administrators and contributors to interest rate benchmarks. ESMA states that, in coordination with NCAs, it expects … Continue Reading

European Commission sets out sustainability criteria for benchmarks

On Wednesday, 8 April 2020, the European Commission published three draft delegated regulations setting out sustainability criteria for benchmarks provided in accordance with the Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (BMR). These measures follow amendments to the BMR introduced … Continue Reading

EBA updates impact of the Basel III reforms on EU banks’ capital and compliance with liquidity measures

On 8 April 2020, the European Banking Authority (EBA) published two reports measuring the impact of implementing the final Basel III reforms and monitoring the current implementation of liquidity measures in the EU. Overall, the EBA estimates that the Basel III reforms, once fully implemented in 2028 after the additional delay of one year agreed … Continue Reading

Japanese Financial Services Agency and the Bank of Japan – Summary of Survey Results on the Use of LIBOR and Main Actions Needed

The Japanese Financial Services Agency (JFSA) and the Bank of Japan have published the results of a survey on the use of LIBOR by financial institutions (including banks, securities companies insurance companies and others), their LIBOR exposures and LIBOR transition progress. The survey enables supervisory authorities to quantify the number of contracts that reference LIBOR … Continue Reading
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