On December 14, the European Securities and Markets Authority (ESMA) published an updated version of its questions & answers document (Q&As) on the implementation of the EU Benchmarks Regulation (BMR). The Q&As aim to promote common supervisory approaches and practices in the day-to-day application of the BMR.
The Q&As include new answers on the following two topics:
- Authorization and registration—applicability of BMR requirements
- Q&A 6.1 addresses the issue of Article 34(2) of the BMR requiring that “an authorized or registered administrator shall comply at ‘at all times’ with the conditions laid down” in the BMR. ESMA’s opinion is that the wording of this provision suggests that only an authorized or registered administrator is required to comply with the BMR’s conditions which, in this context, should be understood to encompass the requirements imposed by the BMR on administrators.
- The same Q&A addresses the issue of Article 34(4) of the BMR, which sets out that “the applicant [index provider] shall provide all information necessary to satisfy the competent authority that the applicant has established, at the time of authorization or registration, all the necessary arrangements to meet the requirements laid down in [the BMR]”. ESMA’s view is that this is a clear indication that index providers must be in a position to meet the requirements of the BMR at the time of authorization or registration, to then become authorized or registered. Therefore, EU index providers are required to comply with the obligations laid down in the BMR only at the time of authorization or registration.
- Requirements for users of benchmarks—written plans for the cessation or material changes of a benchmark
- In Q&A 7.1, ESMA confirms that Article 28(2) of the BMR applies from January 1, 2018. Therefore, from this date, supervised entities, other than administrators, will be required to produce and maintain robust written plans (Plans) setting out the actions that they would take in the event of a benchmark they are using materially changing or ceasing to be provided.
- ESMA considers that supervised entities, other than administrators, are required to reflect the Plans in contracts entered into with clients after January 1, 2018. For contracts entered into prior to January 1, 2018 and still existing at that date, ESMA expects supervised entities, other than administrators, to amend them where practicable and on a best efforts basis.
The updated version of the Q&As is available here.