Draft Guidelines for Non-Significant Benchmarks

Of relevance to: Users, administrators and contributors to benchmarks and any market participant
Key date: Applicable from 30 September 2017

Earlier this year, the European Securities and Markets Authority (“ESMA”) submitted to the European Commission its draft regulatory and implementing technical standards applicable to critical and significant benchmarks, in relation to the Benchmarks Regulation (“BMR”) which will become fully applicable on 1 January 2018.

Any market participant could be affected, although the BMR will be of particular interest to administrators of benchmarks, contributors to benchmarks and users of benchmarks.

ESMA is now proposing draft guidelines for non-significant benchmarks in the following areas:

  1. procedures, characteristics and positioning of the oversight function,
  2. appropriateness and verifiability of input data,
  3. transparency of methodology, and
  4. governance and control requirements for supervised contributors.

ESMA invites responses to their Consultation Paper by 30 November 2017.

Investment managers need to consider their use of benchmarks and any resulting new client disclosure requirements, which may include amendments to terms and conditions and updates to prospectuses and annual client reports.

Whilst formal applications cannot be submitted to the FCA before 1 January 2018, benchmark administrators may now submit a draft application.