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Financial benchmarks are used as references for a variety of financial transactions and many are used globally. Unfortunately, investors’ confidence has been damaged by recent developments in this area. The Federation therefore believes that as a short-term measure it is essential to restore confidence in the setting process of money market indices in order to allow financial markets to function effectively.
The Federation believes that bringing benchmark and indices within the EU regime for market abuse is the right step forwards in order to re-establish confidence in the indices setting process and introduces tools for the supervisory community to police more effectively undesirable market behaviour in the sphere of market instruments such as benchmarks and indices.
The EBF highlights that an eventual substitution of existent money-market indices by new ones or the introduction of changes regarding the calculation method would certainly have important legal and economic implications for financial institutions. Furthermore, the EBF believes that existing money market indices should continue to function in order to limit the impairment impact on existing legal contracts and customer loans as well as not to give rise to potential litigation over the disappearance of such benchmarks.
The Commission’s consultation is very wide and covers not only money market indices but also stock market indexes and other types of benchmarks. In this regard, the EBF highlights that a one-size-fits-all approach would not be efficient due to the varying objectives and characteristics of the different classes of indices and benchmarks.