Sun. Jun 26th, 2022

Brussels, 23 May 2022

The European Commission is seeking views on a possible enhancement of the rules concerning benchmarks administered outside of the European Economic Area (or third-country benchmarks). The relevant provisions, due to apply as of 1 January 2024, will introduce a specific set of rules on the use of non-EEA benchmarks by EU entities. Benchmarks are an intrinsic part of financial markets: they are indices used, in particular, to price financial instruments and contracts (including household mortgages) or to measure the performance of an investment fund.

The 2021 review of the Benchmark Regulation (BMR) extended the transitional period for third-country benchmarks to early 2024 to ensure a smooth transition to the new regime. The use of certain non-EEA benchmarks is thought to be widespread and in some cases not replaceable with that of EU benchmarks, especially for financial market participants seeking to mitigate currency or rate risk in their activities.

Considering the economic relevance of third-country benchmarks in the EU, and in light of recent market developments, the new regime is likely to have a significant impact on EU market participants. An area of specific focus is the use of third-country benchmark that advertise Environmental, Social and Governance (ESG) features.

Ahead of the 1 January 2024 deadline, the Commission is gathering views of stakeholders, in particular administrators of benchmarks (both located in the EU and outside the EU), of supervised entities in the EU which use benchmarks administered in a third country and of businesses and investors who are end-users of benchmarks for investment, hedging or other purposes. This work comes in addition to ongoing work on the possibility of creating an EU ESG benchmark label.

The targeted consultation runs until 12 August 2022. You can have your say here.