The European Parliament and the Council have just finalised the review of the Benchmarks Regulation, after reaching a political agreement in December. The revamped rules aim to strike a balance between reducing burden on EU administrators and users of benchmarks, while still ensuring the robustness and reliability of benchmarks used and produced in the EU.
Benchmarks exist throughout the economy as measurements of prices, interest rates, exchange rates and other economic variables. They play a key role in setting the price of financial instruments or contracts, such as derivatives, funds and the interest rate of loans, such as in mortgages or consumer credit contracts. This means benchmarks measure and provide vital information, often across market segments.
The fact that benchmarks directly impact prices and returns means that there may be conflicts of interest, and, consequently, conduct risk around benchmark‑setting processes. For this reason, and in the wake of scandals that came to light in 2012 involving interest rate and foreign exchange benchmarks, international and EU bodies took steps to regulate benchmarks. First, the International Organization of Securities Commissions (IOSCO) established an overarching framework of principles for benchmarks used in financial markets. Subsequently, the EU adopted the Benchmarks Regulation (BMR), which, since 2018, has applied to all EU benchmark administrators. Since then, benchmark administrators have to comply with rules on the organisation of their business and on the input data and procedures they use to calculate benchmarks. Benchmark users also have to fulfil certain requirements: they can only use benchmarks that comply with the rules, and need to prepare for potential disruptions, such as the cessation of the benchmark they are using. Supervisory duty over benchmark administrators, benchmark users and input data contributors are shared between national supervisors and the European Securities and Markets Authority (ESMA), with the latter responsible for EU critical benchmarks and recognised non‑EU benchmark administrators.
Overall, the BMR has achieved the objectives it was created for. It has ensured trustworthy benchmarks that are calculated more accurately than before. It has made the way users select and use benchmarks more deliberate and has made contracts more resilient. And it has supported large‑scale reform processes of interest rate benchmarks, such as, the reform of EURIBOR and the cessation of LIBOR. However, some limitations of the regulation have become apparent over time. Notably, under the regulation, a benchmark administrator must comply with the BMR and be supervised as of the first use of one of its benchmarks, with limited proportionality and consideration for the benchmark’s economic significance. In addition, the BMR restricts EU benchmark users, which include banks and investment funds, from accessing non‑EU benchmarks that do not comply with equivalent rules. In the majority of cases, benchmark administrators outside the EU have clear economic incentives to comply with EU rules, as EU benchmark users represent an important market. However, where benchmarks are not provided on a for‑profit basis, or where revenues in the EU market are limited, administrators may opt to withdraw from the EU market instead of going through the costs of complying with the BMR. In such cases, EU benchmark users, such as asset managers, would no longer be able to use those benchmarks and would be at a clear disadvantage.
The Commission proposed a review of the rules in October 2023 as part of a broader package of measures to reduce administrative burden on companies and the European Parliament and the Council reached a political agreement in December 2024. The revised rules aim to keep only the most economically relevant benchmarks in scope, by introducing a minimum threshold of EUR 50 billion in financial instruments and financial contracts that reference a benchmark. This is expected to reduce the number of benchmark administrators in scope of the regulation by 80 to 90 percent. In addition, benchmarks labelled as EU climate transition benchmarks and EU Paris‑aligned benchmarks, produced by an EU or a non‑EU administrator, will remain in scope as those labels are based on the BMR and pursue important EU policy objectives. The European Parliament and the Council decided that commodity benchmarks based on input data gathered through journalistic means should also stay in scope, with a threshold of EUR 200 million.
A key objective of the review was to ensure that businesses and investment firms in the EU continue to have access to benchmarks provided outside the EU. This is achieved in the first instance by the EUR 50 billion threshold: only a limited number of economically significant non‑EU benchmarks will from now on be in scope, and it can be assumed that their administrators will have clear incentives to comply with the BMR. For exceptional cases where there might still be issues, the Commission has the power to exempt individual spot foreign exchange benchmarks that are frequently used for hedging.
Furthermore, the European Parliament and the Council also agreed to expand the role of ESMA as supervisor for all non‑EU benchmarks that will be in scope of the BMR. This will make ESMA the single interlocutor for non‑EU benchmark providers that want to offer benchmarks to users in the EU.
The new rules will apply from 1 January 2026.
Related links
Markets integrity: Benchmarks and market abuse
Implementing and delegated acts – Benchmarks Regulation
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