Position paper on the Benchmarks Regulation Review

FESE welcomes the Commission’s proposal to amend the Benchmarks Regulation (BMR) to address existing shortcomings, including concerns regarding the compliance burden for benchmark administrators to offer their benchmarks in the EU. Certain aspects of the proposal could, however, benefit from refinement to enhance clarity and calibrate level playing field considerations. Notably:

• The designation regime for significant benchmarks introduces unnecessary complexity and uncertainty compared to a scope based on clear quantitative thresholds, such as the EUR 50 billion criterion. The criteria of ‘substitutability’ and ‘significant and adverse impacts’ are open to interpretation which risks raising potential competition concerns. This may lead to similar benchmarks from different administrators being subject to unequal conditions across the EU, with those with higher visibility for local economies more likely to be designated, and those based on regulated data particularly susceptible to this distortion of competition due to their high replicability. We propose to remove the designation-based regime or, if eventually retained, to exempt benchmarks based on regulated data. In the latter case, the coordinating role of ESMA to ensure supervisory convergence should be strengthened and the level 2 criteria should be clarified.
• Recognised or endorsed administrators should be able to offer EU CTBs and PABs, provided they demonstrate compliance with all ESG label BMR requirements. Restricting the offering of these labels to EU-based administrators not only creates an uneven playing field, but also harms benchmark users, investors and the EU’s sustainability objectives, and could undermine the coherence and efficiency of the overall supervisory regime. Besides, it would override the investments made by third-country administrators to provide these benchmarks, who would also be forced to relocate that part of the business to the EU, resulting in increased costs and reduced internal efficiency.