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Benchmark Regulation (BMR)

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”)

 

Objectives

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
Scope

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 categories  

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.

Entities 

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.

Link:https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32016R1011&from=EN

BMR Latest news and updates

Marie Claire de Saint Exupéry Senior Advisor Public Affairs SGSS
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