Brussels, 27/04/2016 (Agence Europe) - On Thursday 28 April, the European Parliament will approve the inter-institutional agreement reached in November 2015 on the proposed regulation creating a framework for benchmarks (see EUROPE 11438).
This agreement aims to improve the governance of the benchmarks produced and used in the EU financial instruments such as bonds, shares, standardised forward contracts and credit default swaps. The Commission's proposal dates back to September 2013, following the scandal surrounding the manipulation of the LIBOR (London Interbank Offered Rate) and the EURIBOR (Euro Interbank Offered Rate), two benchmarks used for inter-bank interest rates (see EUROPE 10663).
The regulation, which follows the principles agreed by the International Organisation of Securities Commissions (known by its French acronym, OICV), lays down three categories of benchmarks, to be covered by different regimes: critical benchmarks, significant benchmarks and non-significant benchmarks. The text provides that the benchmark administrators will be subject to a prior accreditation obligation and to transparency requirements over the method used to calculate these benchmarks. If an administrator fails to comply with the provisions of the future regulation, the competent authority may withdraw or suspend this accreditation. The administrators will be obliged to have in place appropriate governance and control mechanisms to avoid any conflicts of interests.
The European Securities and Markets Authority (ESMA) will coordinate the monitoring of the benchmark administrators, which will be the responsibility of the national competent authorities. For benchmarks of critical importance, a college of national supervision authorities, including ESMA, will make the essential decisions.
Specific regimes will apply to commodity benchmarks, interest rate benchmarks and benchmarks based on regulated data.
The benchmarks supplied by countries which are not EU members will be used by entities supervised in the EU in the framework of 'recognition' or approval regimes. A partial equivalence regime will make it possible to grant equivalence to third countries which do not, in the near future, intend to set in place a full regime for all types of benchmarks but which have brought in, or are likely to bring in, specific regimes for certain types of benchmarks or administrators, for instance certain interest rate benchmarks. (Original version in French by Elodie Lamer)