EU Secondary Legislation under the Benchmark Regulation Published

Four Commission Delegated Regulations supplementing the Benchmark Regulation have been published in the Official Journal of the European Union. The Benchmark Regulation regulates the provision of benchmarks, contributions of data to a benchmark and the use of benchmarks within the EU. It sets out the authorization and registration requirements for benchmark administrators, including third country entities, and stipulates requirements for governance and control of administrators. The Benchmark Regulation establishes different rules for different categories of benchmarks, depending on the risks involved, and imposes additional requirements on benchmarks considered to be critical. It also sets out the powers of national regulators to mandate, under certain conditions, contributions to or the administration of a critical benchmark.

The four Delegated Regulations are:

1.  Delegated Regulation (2018/65) on the technical elements of definitions used in the Benchmark Regulation, in particular, the definitions of "making available to the public" and "administering of arrangements for determining a benchmark".

2.  Delegated Regulation (2018/67) on the conditions for national regulators to assess the impact of the cessation of or change to an existing benchmark that no longer complies with the Benchmark Regulation. The Regulation sets out in detail the conditions that must exist for a national regulator to determine that the cessation or changing of an existing benchmark could result in a force majeure event, frustrate or otherwise breach the terms of a financial instrument or the rules of an investment fund referencing an existing benchmark.

3.  Delegated Regulation (2018/66) on how the nominal amount of financial instruments other than derivatives, the notional amount of derivatives and the net asset value of investment funds are to be assessed for the purposes of categorizing a benchmark. The Benchmark Regulation requires benchmarks to be categorized as critical, significant or non-significant and applies different requirements according to those categories. A key factor for that categorization is the total value of financial instruments, financial contracts or investment funds referencing a benchmark. The Delegated Regulation sets out required methods for calculating the nominal amount of financial instruments other than derivatives, the notional amount of derivatives and the net asset value of investment funds to ensure that benchmarks are categorized in a consistent manner across the EU.

4.  Delegated Regulation (2018/64) on the criteria to be applied by national regulators when assessing whether certain events would result in significant and adverse impacts on market integrity, financial stability, consumers, the real economy or the financing of households and businesses in one or more Member States. The Benchmark Regulation requires the European Commission to establish and review at least every two years a list of critical benchmarks provided by administrators located within the Union. For a benchmark to be considered critical, it must meet certain conditions. One condition is whether the cessation of or change to a benchmark would result in significant and adverse impacts on market integrity, financial stability, consumers, the real economy or the financing of households and businesses in one or more Member State. The Delegated Regulation provides the criteria for national regulators to apply when assessing whether a benchmark meets this particular condition.

The Benchmark Regulation applied from January 1, 2018. These four Delegated Regulations will enter into force on February 6, 2018 and will be directly applicable across all EU Member States.

View Delegated Regulation (2018/65).

View Delegated Regulation (2018/67).

View Delegated Regulation (2018/66).

View Delegated Regulation (2018/64).