The Council has confirmed its agreement with EP that the approved benchmarks Regulation needs to be strict in order to restore trust in the integrity of benchmarks. The Council laid out the three categories of benchmarks:
- critical benchmarks, used as a reference for financial instruments or financial contracts or for the determination of the performance of investment funds having a total value of at least €500 billion on the basis of all the range of maturities of the benchmark; or benchmarks based on submissions by contributors mainly located in one Member State and recognised as being critical there. Benchmarks of at least €400 billion may also be critical if they have no or very few appropriate market-led substitutes, and if their absence would have significant and adverse impacts on market integrity, financial stability, consumers, the real economy, or the financing of households and corporations;
- significant benchmarks used as a reference for financial instruments or financial contracts or for the determination of the performance of investments funds with a total average value of at least €50 billion on the basis of all the range of maturities or tenors of the benchmark over a period of six months. Benchmarks below this threshold can be upgraded if they have a significant impact on the markets, with no or few market-led substitutes; and
- non-significant benchmarks which are subject to a light regulatory regime based on a comply-or-explain mechanism, i.e. general principles in line with internationally agreed principles.
The Council also identified the specific regimes which will apply to commodity, interest rate and regulated data benchmarks and the third-country regime. (Source: Council Explains Tougher Benchmarks Regulation)