Brussels, 20 December 2023
Today, the Council agreed its negotiating mandate on benchmarks regulation. The proposal concerns the scope of the rules for benchmarks, the use in the EU of benchmarks provided by an administrator located in a third country, and certain reporting requirements.
Benchmarks are widely used by companies and investors in the EU as a reference in their financial instruments or contracts.
Under the current rules, EU market participants can only use benchmarks produced or administered in a non-EU country if the country concerned has a framework equivalent to that of the EU, if its benchmark is endorsed by an EU benchmark administrator, or if the benchmark is recognised in the EU.
The proposal aims to reduce the regulatory burden on administrators of benchmarks that are not economically significant in the EU by removing them from the scope of current rules. It intends to significantly reduce the scope of benchmark administrators subject to its requirements. It also aims to simplify the current approach to non-EU country benchmarks in the EU.
In its negotiating mandate, the Council agreed that the regulatory treatment of commodity benchmarks should be tailored to their specific characteristics.
The Council specified that only those benchmarks designated as critical, as significant (either by meeting a quantitative threshold, or by designation of the national competent authority concerned or by ESMA), EU Paris-aligned Benchmarks, EU Climate Transition Benchmarks, and certain commodity benchmarks (subject to Annex II) should remain under the scope of regulation. Administrators of those benchmarks that were authorised, registered, endorsed or recognised on the date of application of this amending regulation should not be obliged to re-apply for authorisation, registration, recognition, or endorsement.
Background and next steps
This proposal forms part of a package of measures to rationalise reporting requirements. It aims to rationalise benchmark authorisation and registration and alleviate the burden on EU companies, in particular SMEs. Market participants have called for a revision of the framework of benchmarks regulation and for making regulatory requirements dependent on the systemic relevance of a benchmark or the significance of the role that a benchmark plays for the operation of markets in a member state or across the EU.
In its Communication ‘Long-term competitiveness of the EU: looking beyond 2030’, the Commission stressed the importance of a regulatory system that ensures that objectives are reached at minimum costs. It has therefore committed to a fresh push to rationalise and simplify reporting requirements, with the aim of reducing the administrative burden by 25%, without undermining the related policy objectives.
Source – EU Council