Q&As

EU Benchmark Regulation and UK benchmark reform—how do they interrelate?

read titleRead full title
Published on LexisPSL on 02/03/2016

The following Banking & Finance Q&A provides comprehensive and up to date legal information covering:

  • EU Benchmark Regulation and UK benchmark reform—how do they interrelate?
  • What is the background to benchmark reform?
  • Do the EU and UK have a similar focus in relation to benchmark regulation?
  • EU Benchmark Regulation
  • UK developments
  • Will the Benchmark Regulation change the current UK position on benchmarks?
  • What is next in terms of developments in relation to benchmarks in the EU and the UK?
  • Benchmark regulation
  • UK developments

EU Benchmark Regulation and UK benchmark reform—how do they interrelate?

What is the background to benchmark reform?

Proposals for benchmark reform in the UK, European Union (EU) and elsewhere were triggered by the LIBOR scandals where it emerged that traders had been manipulating LIBOR. The UK responded with commissioning a report into LIBOR (known as the The Wheatley Review) and taking steps to implement its recommendations.

Developments internationally included the report in July 2013 by the International Organization of Securities Commissions (IOSCO) on 'Principles for Financial Benchmarks' which set a common cross-jurisdictional framework for good market practice. The Financial Stability Board has also published reports on specific benchmarks, recommending in particular that key benchmarks are more anchored in transaction data and that alternative risk-free benchmarks are introduced to give users more choice. Work is ongoing in the UK to develop sterling risk-free reference rates.

In the EU, a new Benchmark Regulation was proposed in September 2013 and is now going through its final stages.

Together with the Benchmark Regulation, the European Commission (Commission) is addressing the manipulation of benchmarks in other key pieces of upcoming legislation:

  1. the Market Abuse Regulation to take effect from July 2016 makes it a criminal offence to manipulate price indices or benchmarks through the provision of false or misleading data/assessments; and

  2. the Markets in Financial Instruments Directive II to take effect from January 2018 which

Popular documents