Following a REFIT review of the Benchmarks Regulation (BMR Refit), the Commission has proposed excluding non-significant EU and non-EU benchmarks from the scope of the BMR.

The Commission’s BMR Refit proposals, adopted on 17 October 2023, include:

1. Reduction in scope: the scope of the BMR would be limited to administrators of critical/significant benchmarks and EU climate benchmarks (Paris-aligned and Climate Transition benchmarks (PABs/CTBs)). The current €50bn usage threshold for significant benchmarks is retained with the option for Member States to designate particular benchmarks as significant if they meet qualitative conditions for significance.  EU CTBs/PABs would be regulated in the same way as significant benchmarks, irrespective of their size.
2. Retention of third country rules: no significant changes are proposed to the BMR’s third-country regime of equivalence/recognition/endorsement. However, in light of the above change in scope, such rules would only apply to non-EU administrators of significant benchmarks.
3. PAB/CTB limitation: the use of the PAB/CTB labels is limited to EU-based authorised or registered administrators.  Non-EU administrators are prohibited from using such labels or implying benchmarks’ compliance with the EU PAB/CTB minimum standards.
4. Reduced rules for benchmark users: current rules for EU users of EU and non-EU benchmarks are replaced with an obligation not to add ‘new reference’ to any CTB/PAB which is not on the ESMA register or to a significant (EU/non-EU) benchmark which is subject to a public prohibition notice.   As a result, use of EU and non-EU non-significant benchmarks would not be regulated under the BMR provided they do not use the PAB/CTB labels.
5. Enhanced benchmarks register: increased information to be made available on the ESMA register which will include lists of EU authorised/registered administrators, non-EU recognised/endorsed administrators, benchmarks subject to a prohibition notice and EU climate benchmarks.
6. Already authorised/registered/endorsed/recognised benchmarks: those benchmarks already regulated under the BMR will be able to avail of a simplified procedure for authorisation, registration, recognition or endorsement under the new rules.
7. Timeline: the BMR Refit proposals are the subject of an industry consultation from 24 October 2023 – 20 December 2023.  It is proposed to finalise the amendments to the BMR by March 2024 and for these to apply from 1 January 2026 (the day after the end of the recently extended BMR transition period for non-EU benchmarks).

Comment

As administrators of non-significant benchmarks represent approximately 90% of the total number of administrators, BMR Refit is expected to significantly reduce the regulatory burden on benchmark administrators.  Users of benchmarks will also benefit from the removal of use restrictions for non-significant, non-climate benchmarks.