In the financial industry benchmarks (e.g. LIBOR and EURIBOR) are used in many products and contracts to e.g. determine price or measure performance. In the wake of their alleged manipulation, the regulator has adopted new rules to improve the governance of benchmarks produced and used in the EU for financial products such as bonds, shares, derivatives and loans.
The Benchmark Regulation (BMR) defines controls for benchmark processes and sets requirements to advance the quality of input data and methodologies used by benchmark administrators. Furthermore, BMR sets specific obligations for the roles of administrators and data contributors plus introduces protection for benchmark users.
1Implementation / enforcement 07/2012 - 09/2013
2Discussion / consultation 09/2013 - 06/2016
3Implementation / enforcement 06/2016 - 01/2018
4In effect 01/2018 -
The BMR is applicable for administrators, supervised contributors and users of 'benchmarks'. The objectives of the BMR are essentially the ones set forth in the IOSCO Principles for Financial Benchmarks as published in 2013. BMR allows supervised entities to use only those benchmarks which are authorized, and thus included in the ESMA register.
Currently, all significant interest rate benchmarks used in the EU have been recognized as BMR non-compliant. Therefore, these interbank offered rates (IBOR) are to be migrated to risk free rates (RFR) by January 2020. Currently, international regulatory initiatives and working groups in different jurisdictions are defining RFR candidates as possible replacements to IBORs.