Brussels, 31/03/2015 (Agence Europe) - It was by a wide majority that the European Parliament's economic and monetary affairs committee endorsed the report by Cora van Nieuwenhuizen (ALDE, Netherlands) on the draft regulation to boost governance in the formation of financial benchmarks.
Van Nieuwenhuizen's report aims to provide proportionality and imposes stricter requirements for “critical” benchmarks, in other words those that influence financial instruments and contracts worth an average of at least €500 billion or that could have a negative impact on stability of the financial markets in Europe.
Qualitative criteria have been added for defining what are to be considered critical benchmarks but the final decision will be made by the European Securities Markets Authority (ESMA) and national authorities. National authorities could, however, deem a benchmark administered within its territory to be critical if it has a “significant” impact on the national market.
In an interview with Bloomberg, Van Nieuwenhuizen said commodity benchmarks “are in, but the way I see it none of them are critical. The requirements are not very different from what they are now”.
The setting of critical benchmarks that affect more than one country will be overseen by a “college” of supervisors, including ESMA and other competent authorities.
Critical benchmark-setting data would have to be verifiable and come from reliable contributors who are bound by a code of conduct for each benchmark. Regulators would be able to demand changes in the codes of conduct or methodology.
If one or more contributors wished to stop contributing to a critical benchmark, the authority would be able to make the contribution mandatory if the withdrawal would make the benchmark unrepresentative.
After the vote, Van Nieuwenhuizen said that the fiddling of benchmarks affects everyone because it affects mortgage rates, pensions, petrol prices and euro exchange rates. She said the proposal would put an end to manipulation of interest rates that the banks had been making money from on the backs of consumers and companies. The vote in plenary may take place in May or July, thus paving the way for three-way talks. The Council of Ministers decided on its negotiating position in February (see EUROPE 11253). Van Nieuwenhuizen hopes trialogue talks can reach agreement before the end of the year. (Elodie Lamer)