Last week, the IIA responded to the European Commission’s consultation on the functioning of the third-country regime under the Benchmark Regulation (BMR). The consultation is meant to seek views on whether the current provision of third-country benchmarks to EU end-users is functioning properly, and to collect data to demonstrate whether the current framework should be amended.
The IIA shares the Commission’s objective of finding a suitable, long-term resolution to the outstanding question of third country benchmarks regime. The current regime would end EU user access to important benchmarks after 2023, greatly limiting their ability to continue to use benchmarks for daily commercial and investing needs. The IIA urges the European Commission to:
- Extend the transitional period for the use of non-EU benchmarks by EU end-users until December 2025, to allow for a proper review of the regime;
- Ensure that only benchmarks that are important for the maintenance of financial stability (by both EU and non-EU administrators) be subject to rules, and promote a level-playing field;
- Ensure no duplication of reporting standards under the ESAP framework.
Benchmarks underpin both wholesale and retail financial markets: they allow financial institutions and businesses to navigate risk, and help investors align their investment preferences to their benchmarking and investment needs, including their ESG preferences (such as with the two Low Carbon Benchmark Regulation labels). Any regulation must be mindful of the global nature of the benchmark industry.