On 30 October 2017, the CSSF published a press release in relation to Regulation (EU) 2016/1011 on indices used as benchmarks (Benchmarks Regulation or Regulation or BMR) [see previous article for more details]. The CSSF recalls that the Benchmarks Regulation will be applicable as from 1 January 2018.

The Regulation aims at 3 types of actors of the market, including:

  • Benchmark administrators;
  • Contributors providing input data in order to establish benchmarks; and
  • Supervised entities using the benchmarks as part of financial instruments or financial contracts, or to measure the performance of investment funds.

Supervised entities

The CSSF would like to particularly draw the attention of supervised entities to the use of benchmarks. According to article 29 of the Regulation, a supervised entity may use a benchmark or a combination of benchmarks in the Union if the benchmark is provided by an administrator located in the Union and included in the register referred to in article 36 or is a benchmark which is included in the register referred to in article 36.

In addition, according to paragraph 2 of article 29 of the BMR, when a prospectus to be published under Directive 2003/71/CE or Directive 2009/65/EC covers transferable securities or other investment products that reference a benchmark, the issuer, offeror, or person asking for admission to trade on a regulated market shall ensure that the prospectus also includes clear and prominent information stating whether the benchmark is provided by an administrator included in the register.

Therefore, it should be noted that the prospectus of transferable securities should contain the abovementioned information as from 1 January 2018. For prospectuses relating to UCITS approved prior to 1 January 2018, the underlying documents shall be updated on the first occasion or at the latest within 12 months after that date.

It is also important to note that, in accordance with paragraph 2 of article 28, the supervised entities using a benchmark should prepare and maintain robust written plans setting out actions that they would take in the event that a benchmark materially changes or ceases to be provided. These entities must reflect the plans in the contractual relationship with clients.

The Press release is available (only in French) at the following web link.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.