Exact matches only
Search in title
Search in content
Search in comments
Search in excerpt
Filter by Custom Post Type

The EU Benchmarks Regulations

January 31, 2018

Financial institutions could be fined a tenth of their revenues if they do not comply with the EU Benchmarks Regulations (BMR), which came into force on 1 January 2018. The rules, created in the wake of the LIBOR-fixing scandal, are intended to ensure robust governance of benchmarks and indices and to make financial benchmarks more reliable.

The text of the Regulations is available here.

Many firms subject to the BMR may have been putting off compliance in the belief that it isn’t as urgent as MiFID II. There is also a two-year transitional period for administrators, which potentially contributes to confusion and firms being complacent.

The FCA urged firms last year to tighten up their use of benchmarks before the regulation came in (see here). If firms are not sure whether they fall within the scope of the Regulations, or would like to be part of future regulatory engagement, they can contact the FCA at

The transitional period does not apply to users1, who should ensure they are aware of the benchmarks they use, secure confirmation from their administrators that they are compliant and put in place ‘robust written plans’ that detail their intentions in the event their benchmarks change or cease to exist.

Firms may be benchmark users and be subject to additional requirements if they are supervised under MiFID II, CRD IV, UCITS or one of the other EU regulations as specified in Article 3(1)(17) and:

  • issue a financial instrument that references an index
  • determine the amount payable under a financial instrument or a mortgage or consumer credit contract by referencing an index
  • are a party to a mortgage or consumer credit contract that references an index
  • provide a borrowing rate calculated as a spread or mark-up over an index or a combination of indices and that is solely used as a reference in a consumer credit contract to which the creditor is a party
  • measure the performance of an investment fund through an index either to track the return of the fund or to define its asset allocation

Many benchmark administrators may be unaware of the new regulations, while many smaller administrator firms lack staff capacity to put the structures required by the rules in place.

Some benchmark users have worked on the assumption that the two-year transition period applicable to EU benchmark administrators also applied to their obligations under the BMR. But, in an update on 15 December 20-17, the European regulator ESMA clarified they are indeed required to have those plans from 1 January 2018 onwards.

How can Thistle help you?

Thistle will continue to keep this area under review and will issue further updates where necessary. Please contact Thistle if you need assistance in relation to any of these issues.