Esma finalises benchmark standards

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The European Securities and Markets Authority (Esma) has published its final report on the draft regulatory and implementing technical standards (RTS/ITS) relating to the EU’s Benchmarks Regulation.

The rules are intended to ensure accuracy and integrity in benchmarks used in the EU for financial purposes. Those affected include producers and administrators of such benchmarks, also to ensure that they are produced in a “transparent and reliable manner”. Administrators will have to implement a new oversight function; methodologies of calculating benchmarks and the data used will be more tightly controlled, and there will be a common approach to authorisation and registration of benchmark administrators across all jurisdictions in the EU.

Having delivered the final RTS/ITS draft, the European Commission now has three months to consider the proposals, which are intended to become European law by 1 January 2018.

Steven Maijoor, Esma chair, said: “The Benchmarks Regulation will ensure the accuracy, robustness and integrity of benchmarks and the benchmark setting process by clarifying the behaviours and standards expected of administrators and contributors.”

“These requirements will ensure that benchmarks are produced in a transparent and reliable manner and so contribute to well-functioning and stable markets, and investor protection. The draft standards published today establish a common regulatory framework under which benchmarks are provided, produced and used, which will help to restore trust both in benchmarks and financial markets.”

The Benchmarks Regulation came about following concerns about the integrity of benchmarks used to reference prices of financial instruments and the performance of investment funds. Since the global financial crisis, there have been a number of investigations by financial regulatory authorities and even court cases around benchmarks such as Libor.

Details of the final draft proposals from Esma are available here: ESMA70-145-48 Final Report – Draft technical standards under the Benchmarks Regulation