Regulation (EU) 2016/1011 of the European Parliament and of the CouncilShow full title

Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (Text with EEA relevance)

CHAPTER 5U.K.Significant benchmarks

Article 24U.K.Significant benchmarks

1.A benchmark which [F1is not a critical benchmark] is significant when:

(a)it is used directly or indirectly within a combination of benchmarks as a reference for financial instruments or financial contracts or for measuring the performance of investments funds having a total average value of at least EUR 50 billion on the basis of all the range of maturities or tenors of the benchmark, where applicable, over a period of six months; or

(b)it has no or very few appropriate market-led substitutes and, in the event that the benchmark ceases to be provided or is provided on the basis of input data no longer fully representative of the underlying market or economic reality or unreliable input data, there would be a significant and adverse impact on market integrity, financial stability, consumers, the real economy or the financing of households or businesses in [F2the United Kingdom].

2.The [F3FCA must:]

[F4(a)][F5review the value in point (a) of paragraph 1 (“the threshold”)] in the light of market, price and regulatory developments as well as the appropriateness of the classification of benchmarks with a total value of financial instruments, financial contracts or investment funds referencing them that is close to that threshold F6... [F7; and

(b)provide a written report to the Treasury setting out the results of the review and making a recommendation as to whether the threshold should be amended.]

[F82A.The FCA must conduct the review and provide the report to the Treasury:

(a)within the period of two years beginning with IP completion day; and

(b)thereafter, at intervals of at least every two years, with each interval beginning with the date on which the last report was provided.

2B.The Treasury may by regulations amend the threshold in point (a) of paragraph 1 having regard to:

(a)the matters referred to in point (a) of paragraph 2; and

(b)any report prepared by the FCA under paragraph 2.]

3.An administrator shall immediately notify [F9the FCA] when its significant benchmark falls below the threshold mentioned in point (a) of paragraph 1.

Textual Amendments

Article 25U.K.Exemptions from specific requirements for significant benchmarks

1.An administrator may choose not to apply Article 4(2), points (c), (d) and (e) of Article 4(7), point (b) of Article 11(3) or Article 15(2) with respect to its significant benchmark where that administrator considers that the application of one or more of those provisions would be disproportionate taking into account the nature or impact of the benchmark or the size of the administrator.

2.In the event that an administrator chooses not to apply one or more of the provisions referred to in paragraph 1, it shall immediately notify [F10the FCA] and provide it with all relevant information confirming the administrator's assessment that the application of one or more of those provisions would be disproportionate taking into account the nature or impact of the benchmarks or the size of the administrator.

3.[F11The FCA] may decide that the administrator of a significant benchmark is nevertheless to apply one or more of the requirements laid down in Article 4(2), points (c), (d) and (e) of Article 4(7), point (b) of Article 11(3) and Article 15(2) if it considers that it would be appropriate taking into account the nature or the impact of the benchmarks or the size of the administrator. In its assessment, [F12the FCA] shall, based on the information provided by the administrator, take into account the following criteria:

(a)the vulnerability of the benchmark to manipulation;

(b)the nature of the input data;

(c)the level of conflicts of interest;

(d)the degree of discretion of the administrator;

(e)the impact of the benchmark on markets;

(f)the nature, scale and complexity of the provision of the benchmark;

(g)the importance of the benchmark to financial stability;

(h)the value of financial instruments, financial contracts or investment funds that reference the benchmark;

(i)the administrator's size, organisational form or structure.

4.Within 30 days of receipt of a notification from an administrator under paragraph 2, [F13the FCA] shall notify that administrator of its decision to apply an additional requirement pursuant to paragraph 3. In the event that the notification to [F13the FCA] is made during the course of an authorisation or registration procedure, the deadlines set out in Article 34 shall apply.

5.When exercising its supervisory powers in accordance with Article 41, [F14the FCA] shall regularly review whether its assessment pursuant to paragraph 3 of this Article is still valid.

6.If [F15the FCA] finds, on reasonable grounds, that the information submitted to it pursuant to paragraph 2 of this Article is incomplete or that supplementary information is needed, the 30-day time limit referred to in paragraph 4 of this Article shall apply only from the date on which such complementary information is provided by the administrator, unless the deadlines of Article 34 apply pursuant to paragraph 4 of this Article.

7.Where an administrator of a significant benchmark does not comply with one or more of the requirements laid down in Article 4(2), points (c), (d) and (e) of Article 4(7), point (b) of Article 11(3) and Article 15(2), it shall publish and maintain a compliance statement that clearly states why it is appropriate for that administrator not to comply with those provisions.

8.[F16The FCA may make] technical standards to develop a template for the compliance statement referred to in paragraph 7.

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9.[F18The FCA may make] technical standards to specify further the criteria referred to in paragraph 3.

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Textual Amendments