Benchmark Regulation (BMR)
Bechmark Regulation (EU) 2016/1011 of the European Parliament and the European Council on indices used as benchmarks in financial instruments and financial contracts (the “Regulation”)
Entry into force
1 January 2018
What is the Benchmark Regulation?
The Regulation aims to:
- Ensure benchmarks produced or used in the EU are robust and reliable
- Restore confidence in benchmarks
- Protect consumers and investors through greater transparency
- Improve governance and controls over the benchmark process
An Index is any figure published or “made available to the public” (i.e. accessible by a potentially indeterminate number of recipients) and regularly determined.
A benchmark is any index by reference to which the amount payable under an instrument/contract, or the value of an instrument, is determined, or an index that is used to measure the performance of an investment fund.
Benchmark are classified as:
Critical benchmarks (e.g. – ibor): Benchmarks used for financial instruments, contracts and performance of investment funds having a total value of at least EURO 500bn, and meeting qualitative criteria such as location of contributors and importance of the benchmark in the country where a majority of contributors is located
Significant benchmarks: Benchmarks used for financial instruments, contracts and performance of investment funds having a total value of at least EUR 50bn over a period of six months, and meeting qualitative criteria such as the benchmark has no reliable substitute, and its absence would lead to market disorder
Non-significant benchmarks: Benchmarks that do not fulfil the conditions set for critical or significant benchmarks.
BMR introduces obligations for Benchmark Administrators, Benchmark Contributors and Benchmark Users:
1. Benchmark Administrators: Supervised entities which:
- Administer the arrangements determining the benchmark
- Collect and analyse the input data
- Determine the rate of the benchmark
- Significant benchmarks
2. Benchmark Contributors: Entities providing any input data required in connection with the determination of a benchmark, and provided for that purpose
3. Benchmark Users: Any legal or natural person which:
- Issue an instrument/contract referencing an index/indices
- Be a party to a contract referencing an index/indices
- Determine an instrument / contract payable amount by referencing an index/indices
- Provide a borrowing rate calculated as a spread or mark-up over an index/indices used as a reference in a contract to which the creditor is a party
- Measure fund performance through an index/indices.
Find out more
Click here to discover our presentation of the Benchmark Regulation (BMR) and of its key elements (summary).
Click here to discover our analysis of the Benchmark Regulation (BMR), its main impacts and its key dates.