On May 15, the Financial Industry Regulatory Authority (FINRA) issued a regulatory notice (the Notice) reminding firms of their obligations in connection with oil-linked exchange-traded products (ETPs). In light of the practical difficulties involved in investing directly in commodities such as oil, commodity-linked ETPs, which often track commodity futures or futures indices rather than the underlying spot commodity, can provide investors with exposure to such commodities. Due to their complexity, ETPs may not be well understood by investors, as the products may be linked to unfamiliar indices or reference benchmarks. As the crude oil market has recently endured extraordinary conditions, several oil-linked ETPs have experienced significant volatility and lost a substantial percentage of their value.
Continue Reading FINRA Issues Regulatory Notice Regarding Sales Practice Obligations With Respect to Oil-Linked Exchange-Traded Products

The International Swaps and Derivatives Association, Inc. (ISDA) has launched a new webpage containing information about interest rate benchmark reform and the transition away from the use of interbank offered rates (IBORs, including LIBOR) as floating rates in swap transactions. The page and subsequent materials are available to everyone, not just ISDA members.
Continue Reading ISDA Launches Benchmark Reform Information Source

On November 29, the UK’s Financial Conduct Authority (FCA) published a consultation paper on applying the Senior Managers Regime (SMR) to benchmark administrators. (For more information on the Senior Managers and Certification Regime, or SM&CR, please see the July 28, 2017 edition of the Corporate & Financial Weekly Digest.)

SM&CR already applies to banks and insurers, and will apply to most other UK financial services firms as of December 9. Because benchmark administrators only began to be supervised by the FCA in January 2018, the SMR will apply to them starting December 7, 2020. This gives these firms one extra year to prepare for the regime.
Continue Reading SM&CR to Apply to Benchmark Administrators

On October 22, the UK Financial Conduct Authority (FCA) published an evaluation paper that considers the impact that bringing seven additional benchmarks into its regulatory and supervisory regime had on the market.

The paper evaluates the Benchmarks (Amendment) Instrument 2015 (Benchmarks Instrument), by which the FCA made amendments to the FCA Handbook to reflect the additional benchmarks.
Continue Reading FCA Publishes Evaluation Paper Relating to Bringing Additional Benchmarks Into Regulatory and Supervisory Regime

On July 17, the European Securities and Markets Authority (ESMA) updated its Q&As on 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 update to the Q&As on the BMR clarifies:

  1. when a calculation agent is considered a user of benchmarks

On March 22, the European Securities and Markets Authority (ESMA) updated its Q&As on the European Union (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 updated Q&As on the BMR add one new question and answer which considers the application of governance and control requirements by supervised contributors during the transitional period, the varying timeframes of which are further detailed in Article 51 of the BMR.
Continue Reading ESMA Further Updates Its Q&As on the Benchmarks Regulation

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.
Continue Reading ESMA Updates Q&A on Benchmarks Regulation

On February 15, the European Securities and Markets Authority (ESMA) published a discussion paper (ESMA/2016/288) (Discussion Paper) regarding implementation of the regulation on indices used as benchmarks in financial instruments and financial contracts (Benchmarks Regulation).

The Discussion Paper is designed to inform ESMA’s work on draft regulatory technical standards and technical advice to the European Commission, in relation to the Benchmarks Regulation.
Continue Reading ESMA Publishes Discussion Paper on European Benchmarks Regulation