On 4 March 2024, the European Parliament issued a press release stating that the Economic and Monetary Affairs Committee (ECON) had adopted the text of a proposed Regulation which amends the Benchmarks Regulation as regards the scope of the rules for benchmarks, the use in the Union of benchmarks provided by an administrator located in a third country, and certain reporting requirements.
The press release goes on to state that:
- MEPs decided that the new rules should apply to critical benchmarks, significant benchmarks, EU Climate Transition Benchmarks (EU CTB), EU Paris-aligned Benchmarks (EU PAB) and certain commodity benchmarks, in order to prevent green-washing and assure adequate supervision.
- The new rules also ensure that the current threshold of a total average value of at least 50 billion euro to define a significant benchmark should be retained. Other benchmarks would be subject to a voluntary supervision regime.
- MEPs have urged the European Securities and Markets Authority (ESMA) to develop technical standards specifying the calculation method including potential data sources to classify a benchmark as significant. Additionally, administrators of benchmarks used in the EU should attempt to obtain a globally agreed identifier code to identify their benchmarks.
- MEPs held that ESMA should have a supervisory role in case of critical, significant, cross-border, third country, as well as EU CTB and EU PAB benchmarks.
- MEPs agreed that previously supervised benchmark administrators would keep their existing registration, authorisation, recognition or endorsement for nine months after entry into force of the new rules and should not be obliged to re-apply if they voluntarily opt-in to the draft Regulation within nine months. Administrators of significant benchmarks should not be obliged to re-apply and should retain their previous status.
Lead MEP, Jonas Fernandez, said: “The Benchmark Regulation proposal that we have adopted today in ECON represents a substantial improvement of the regulatory framework governing the use of these instruments, by completely excluding non-significant benchmarks from the application of this Regulation and by simplifying the approach to third country benchmarks in the EU. The reform maintains the threshold for an index to be considered significant at 50bn euro and introduces additional criteria to better reflect the size of a benchmark index. We have also succeeded in keeping commodity benchmarks within the scope of the Regulation and strengthened ESMA’s supervisory role, particularly in the area of cross-border and third-country benchmarks.”
Next steps
Negotiations between European Parliament and Council of the EU are expected to start after the European Parliament elections.