On September 29, 2016, ESMA published for consultation the draft technical standards it is required to prepare under the Benchmark Regulation. The Benchmark Regulation sets out the authorization and registration requirements for benchmark administrators, including third country entities, and requirements for governance and control of administrators. It provides for different categories of benchmarks depending on the risks involved, imposes additional requirements on benchmarks considered to be critical and gives powers to national regulators to mandate, under certain conditions, contributions to or the administration of a critical benchmark. ESMA is consulting on drafts of the following technical standards:
- RTS on the detailed procedures and characteristics of the oversight functions that benchmark administrators are required to set up, including a non-exhaustive list of governance arrangements that are appropriate for an oversight function;
- RTS on how administrators providing benchmarks are to ensure that input data is appropriate and verifiable and that a contributor has internal oversight and verification procedures in place where input data is contributed from a front office function;
- RTS on information to be provided on key elements of methodology, internal review of methodology and the procedure to consult on material changes of methodology in relation to an administrator's obligation to develop, operate and administer the benchmark and methodology transparently;
- RTS on the elements of the codes of conduct that a benchmark administrator is required to develop for each different type of benchmark, including the responsibilities of contributors in relation to input data, record keeping, suspicious input data reporting and conflict management requirements;
- RTS on the governance and control arrangements that supervised contributors to benchmarks need to comply with;
- RTS on the criteria to be assessed by national regulators when deciding to apply certain provisions of the Benchmark Regulation to a significant benchmark where the benchmark administrator had chosen to exercise its option not to apply those provisions to that benchmark;
- ITS on a template for compliance statements to be used by an administrator of benchmarks where it has chosen not to apply some of the provisions of the Benchmark Regulation;
- RTS on the contents of a benchmark statement that an administrator is required to publish when it begins to provide a benchmark in the EU as well as when such statement must be updated;
- RTS on the information to be provided in an administrator's application for authorization or registration; and
- RTS on the form and content of the application for recognition with the national regulator of the Member State of reference by an administrator located in a third country.
The consultation closes on December 2, 2016. ESMA will consider the responses to the consultation in preparing the final technical standards for submission to the European Commission by April 1, 2017. For the most part, the Benchmark Regulation will apply from January 1, 2018. Certain provisions, giving powers to ESMA to prepare draft technical standards and to the Commission to adopt delegated legislation, applied from June 30, 2016. The technical standards will apply from January 1, 2018.
The consultation paper is available at:
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