EU Benchmarks Regulation (BMR)
The EU Benchmarks Regulation, applicable as of January 2018, provides the basis for the regulation and supervision of benchmark administration in the EU. BMR provides a set of different regulatory frameworks to accommodate the full range of benchmarks present in the market. This is achieved via a categorisation of benchmarks into non-significant, significant and critical categories.
Moreover, the EU legislator also introduced a category covering Regulated-Data Benchmarks to reflect the fact that benchmarks based on regulated data (i.e. data from regulated trading venues) are less prone to manipulation as the input data is already subject to stringent pre and post trade rules in EU legislation (notably MiFID II and MAR).
Euronext supports the broad policy objectives underpinning the new EU framework. At the same time, Euronext has been obliged to avail itself of the transitional provision that BMR provides to existing benchmark providers until Jan 2020. The reason for this is that there are ongoing issues with key definitions in the legislation impacting on the applicability of the regime for Regulated-Data Benchmarks.
Euronext Position on Remaining Definitional Issues in BMR
BMR defines Regulated-Data Benchmarks as benchmarks based on input data which comes ‘entirely and directly’ from (amongst other sources) trading venues, as defined by MiFID.
Today, benchmark administrators often obtain data from trading venues via market data providers that provide the technical link between the venue and administrator without making any alterations to the unprocessed data. In our view, such practices should be deemed to fall within the scope of a Regulated-Data Benchmark, specifically meeting the requirement for the data to be taken ‘entirely and directly from the trading venue’ so long as the data is provided in a raw and unprocessed state.
The Euronext position paper provides more details on the issue as well as outlining proposals for clarification at Level 2.
Downloads
Euronext Position Paper on Benchmarks Regulation – Regulated data benchmark