29 November 2013

ESBG position on Commission's benchmark proposal

Key points

ESBG supports the creation of a common public framework with the aim of strengthening the quality and grounds of trust in indices widely used as benchmarks.

ESBG believes that the scope of the Regulation should correspond to the scope outlined in the IOSCO Principles for Financial Benchmarks published in July 2013. It should be applied proportionately to the size and risks posed by each benchmark and/ or Administrator and the benchmark-setting process.

Precise definitions in line with the IOSCO principles and other EU legislation is essential for clarity and the correct interpretation of the scope and application of the Regulation.

Criteria for the mandatory participation by contributors to critical benchmarks administered in the European Union should be established by ESMA and published as soon as possible. This is necessary to provide clarity and to ensure a clear and cohesive framework for the enforcement of decisions by the competent authority or the college of competent authorities as to when market circumstances necessitate such action for these benchmarks. In the meantime, the Regulator should establish a crisis management procedure to cover the case where critical benchmarks are not in a position to produce a reference rate because of a lack of liquidity in some or all market tenors.

The Regulation should not introduce any new assessment of suitability rules. The interests of consumers in this respect are already well covered under the EU Consumer Credit Directive and the Directive on credit agreements related to residential property as well as the MiFID.

Full position

Commission's proposal

© ESBG