The Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) 596/2014 (Benchmarks Regulation) was published in the Official Journal of the EU. The Benchmarks Regulation entered into force on 30 June 2016. It applies from 1 January 2018, with the exception of certain provisions (specified in Article 59), that apply from 30 June 2016. Article 56 amends articles 19, 35 and 38 of the Market Abuse Regulation (Regulation 596/2014) (MAR) and applies from 3 July 2016.

  • The Benchmark Regulation introduces a new EU regime regulating producers of, contributors to, and users of, benchmarks
  • The Benchmark Regulation aims to contribute to the accuracy and integrity of benchmarks used in financial instruments and financial contracts by:
    • ensuring that benchmark administrators are subject to prior authorisation and on-going supervision depending on the type of benchmark (e.g. commodity or interest-rate benchmarks);
    • improving their governance (e.g. management of conflicts of interest) and requiring greater transparency of how a benchmark is produced;
    • ensuring the appropriate supervision of critical benchmarks, such as Euribor/Libor, the failure of which might create risks for many market participants and even for the functioning and integrity of markets of financial stability.
  • Supervised entities (including UCITS, UCITS ManCos, AIFs and AIFMs) will not be permitted to use unregulated benchmarks.
  • Non-EU benchmarks can only be used in the EU if the benchmark is qualified under the third country regime.
  • Existing UCITS and AIFs will need to ensure that the benchmarks they use are working to comply with the Benchmark Regulation or find an alternative. For UCITS prospectuses approved prior to 1 January 2018, the underlying documentation will need to be updated at the next update and in any event no later than 12 months thereafter.
  • Supervised entities that issue financial instruments that reference a benchmark must produce "robust written plans" that set out the actions they would take should the benchmark materially change or cease to be produced. On request, these plans must be provided to the relevant competent authority.
  • The regulation implements and is in line with the principles for oil price reporting agencies and financial benchmarks agreed at international level by the International Organization of Securities Commissions (IOSCO) in 2012 and 2013.