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30 April 2019

POLITICO: Benchmarks law needs no 'fundamental' rewrite, EU official says


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Europe’s law financial benchmarks will undergo targeted tweaks rather than a complete overhaul, the head of the European Commission’s securities-markets unit said.


“The review will not say we have to fundamentally reform the [benchmark regulation]” (BMR), said Tilman Lüder, speaking at a Brussels event held by the Association for Financial Markets in Europe.

The EU could “streamline” procedures for allowing use of indexes from abroad, Lüder said in an example of a possible adjustment.

The BMR allows use of benchmarks produced outside the bloc, if their countries apply similar standards. But few other jurisdictions regulate index administrators.

Standard Chartered’s global head of foreign exchange trading, Geoff Kot, told the AFME event that his “bigger concern is for the smaller markets” abroad.

“There isn’t really an incentive for those countries to really make a big push … to satisfying a lot of criteria required within this regulation,” Kot said. “These administrators in these countries really don’t care about the offshore market.”

Lüder responded that, to act, he needed “concrete” examples of benchmarks that impact financial products traded in the EU.

The EU introduced its benchmarks regime three years ago in response to scandals of banks including Barclays, Deutsche Bank and UBS manipulating the London Interbank Offered Rate (LIBOR) and other interest-rate indicators. The legislation mandates the Commission to produce a report on its effectiveness by Jan. 1.

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