Access to regulated benchmarks

Access to regulated benchmarks

With the requirement that regulated benchmarks be accessible on a fair, reasonable and non-discriminatory (FRAND) basis from 1 April 2016, Jessica Arrol, associate at Charles Russell Speechlys, suggests that firms carry out a detailed review of existing and template commercial terms as a matter of urgency.

Original news

FCA responds to regulated benchmarks consultation, LNB News 08/02/2016 185

The Financial Conduct Authority (FCA) is to make some modifications to its proposals FRAND access to regulated benchmarks, after considering responses to a consultation paper on the issue. The FCA has published a policy statement summarising responses and its view on the responses.

What is the background to this policy statement?

On 1 April 2015, following the government’s response to implementing the Fair and Effective Markets Review’s recommendations on financial benchmarks, the FCA brought seven further benchmarks into the scope of regulation. This brought the total number of UK regulated benchmarks to eight.

In June 2015, the FCA released consultation paper CP15/18 (see LNB News 03/06/2015 85) setting out proposals for FRAND access to regulated benchmarks. The FCA set out that the eight regulated benchmarks are the most widely used benchmarks in the markets which they relate to, so much so that market participants may not in fact be able to switch to an alternative.

This is a concern as ‘benchmark administrators’ (ie a person who has authorisation to carry on the regulated activity of administering a specified benchmark) may hold significant market power such that they are able to vary the commercial terms of arrangements with market participants with limited fear of them switching to an alternative. The FCA confirms that there is a risk, therefore, that a benchmark administrator could exploit their market power in a way to adversely affect competition.

In CP15/18, the FCA set out proposed FRAND requirements to limit the extent to which benchmark administrators can exploit their market power. The intention was for these rules to apply to arrangements with all users of benchmarks. In summary, the FCA proposed that access

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