The integrity of benchmarks is critical to the pricing of many financial instruments, such as interest rate swaps, commercial and non-commercial contracts, loans and mortgages and risk management. Any risk of manipulation of benchmarks may undermine market confidence, cause significant losses to investors, and distort the real economy.

The Benchmark Regulation was proposed in 2013 in order to restore confidence in benchmarks following LIBOR and EURIBOR scandals. However, the regulation covers a broad range of benchmarks, which differ in their character. Regulated data benchmarks (determined on the basis of input data from regulated venues), for example, are less prone to manipulation compared to interest rate benchmarks.

In 2019, the Benchmark Regulation was reviewed to add two new categories of EU climate transition benchmarks and EU Paris-aligned Benchmarks, as well as sustainability-related disclosures for benchmarks. During 2020, a targeted review of the Benchmark regulation took place, following the UK Financial Conduct Authority (FCA) announcement in 2017 that the London Interbank Offered Rate (LIBOR) will be phased out by the end of 2021. According to the new rules, the European Commission will be able to replace critical benchmarks and other benchmarks with a so-called statutory replacement benchmark, if their termination would lead to a significant disruption in the functioning of financial markets in the EU. In addition, the amended rules extend the transition regime for third-country benchmarks and allow EU supervised entities to use them until the end of 2023.

In 2023, the Commission proposed to review the Benchmark regulation with the aim of reducing administrative and regulatory burden. The proposal reduces the scope of rules applying to third-country benchmarks that are significant for EU markets and removes the risk for EU users of not being able to reference certain benchmarks. To ensure the level playing field benchmarks, scope of rules applying to EU administrators of benchmarks will be reduced ensuring that the regulation applies only to benchmarks deemed as significant and EU climate benchmarks. The review is currently subject to scrutiny by the co-legislators.

For further information on Deutsche Börse Group’s positioning on the matter, find our statements and position papers under Publications.