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)

Changes over time for: Article 20

Alternative versions:

Changes to legislation:

Regulation (EU) 2016/1011 of the European Parliament and of the Council, Article 20 is up to date with all changes known to be in force on or before 29 November 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations.

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.

View outstanding changes

Changes and effects yet to be applied to Article 20:

Regulation revoked by 2023 c. 29 Sch. 1 Pt. 1

Article 20U.K.[F1Critical benchmarks: conditions and other matters]

[F2A1.An administrator shall immediately notify the FCA when the administrator’s benchmark:

(a)exceeds the threshold in paragraph 1(a); or

(b)fulfils the criterion in paragraph 1(c)(ii) and there is reason to believe that it also fulfils the criterion in paragraph 1(c)(iii).]

1.[F3The conditions are:]

(a)the benchmark 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 investment funds, having a total value of at least EUR 500 billion on the basis of all the range of maturities or tenors of the benchmark, where applicable;

(b)the benchmark is based on submissions by contributors the majority of which are located in [F4the United Kingdom] and is recognised as being critical F5... in accordance with the procedure laid down in paragraphs 2, 3, 4 and 5 of this Article;

(c)the benchmark fulfils [F6both] of the following criteria:

(i)

F7...

(ii)

the benchmark has no, or very few, appropriate market-led substitutes;

(iii)

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 on the basis of unreliable input data, there would be significant and adverse impacts on market integrity, financial stability, consumers, the real economy, or the financing of households and businesses in [F8the United Kingdom];

F9...

[F10(d)the benchmark has a sufficient number of appropriate market-led substitutes that it does not fulfil the criterion in point (c)(ii), but:

(i)it is not reasonably practicable for one or more users of the benchmark to switch to one of those substitutes, and

(ii)the benchmark fulfils the criterion in point (c)(iii).]

[F112.Where the FCA considers that a benchmark should be recognised as critical based on an assessment under paragraph 3, and that benchmark is based on submissions by contributors the majority of which are located in the United Kingdom, the FCA shall notify the Treasury and transmit to the Treasury a documented assessment.]

3.For the purposes of paragraph 2, the [F12FCA] shall assess whether the cessation of the benchmark or its provision on the basis of input data or of a panel of contributors no longer representative of the underlying market or economic reality would have an adverse impact on market integrity, financial stability, consumers, the real economy, or the financing of households and businesses in [F13the United Kingdom]. The [F14FCA] shall take into consideration in its assessment:

(a)the value of financial instruments and financial contracts that reference the benchmark and the value of investment funds referencing the benchmark for measuring their performance within the [F15United Kingdom] and their relevance in terms of the total value of financial instruments and of financial contracts outstanding, and of the total value of investment funds, in the [F15United Kingdom];

(b)the value of financial instruments and financial contracts that reference the benchmark and the value of investment funds referencing the benchmark for measuring their performance within the [F15United Kingdom] and their relevance in terms of the gross national product of the [F15United Kingdom];

(c)any other figure to assess on objective grounds the potential impact of the discontinuity or unreliability of the benchmark on market integrity, financial stability, consumers, the real economy, or the financing of households and businesses in the [F15United Kingdom].

F16...

4.Within six weeks of receipt of the notification referred to in paragraph 2, [F17the Treasury must determine whether the FCA's assessment complies with the requirements of paragraph 3.]

[F185.The Treasury must make regulations specifying that a benchmark is critical if:

(a)the FCA has recommended that the benchmark is recognised as critical in accordance with the procedure specified in paragraphs 2 and 3; and

(b)the Treasury [F19determine] that the FCA's assessment complies with the requirements of paragraph 3.]

[F205A.The FCA must:

(a)review [F21the value in point (a) of paragraph 1 (“the paragraph 1(a) value”)] in the light of market, price and regulatory developments and the appropriateness of the classification of benchmarks with a total value of financial instruments, financial contracts, or investment funds referencing them that is close [F22to the paragraph 1(a) value]; and

(b)provide a written report to the Treasury setting out the results of the review and making a recommendation as to whether [F23the paragraph 1(a) value] should be amended.

5B.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.]

6.[F24The Treasury may by regulations]

(a)specify how the nominal amount of financial instruments other than derivatives, the notional amount of derivatives and the net asset value of investment funds are to be assessed, including in the event of an indirect reference to a benchmark within a combination of benchmarks, in order to be compared with the [F25values] referred to in paragraph 1 of this Article and in point (a) of Article 24(1);

[F26(b)amend [F27the value in point (a)] of paragraph 1 having regard to:

(i)the matters referred to in point (a) of paragraph 5A; and

(ii)any report prepared by the FCA under paragraph 5A;]

(c)specify how the criteria referred to in point (c)(iii) of paragraph 1 of this Article are to be applied, taking into consideration any data which helps assess on objective grounds the potential impact of the discontinuity or unreliability of the benchmark on market integrity, financial stability, consumers, the real economy, or the financing of households and businesses in [F28the United Kingdom].

Where applicable, the [F29Treasury] shall take into account relevant market or technological developments.

Textual Amendments

F1Art. 20 heading substituted (31.12.2020) by The Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019 (S.I. 2019/657), regs. 1(2), 16(2) (with regs. 51-53, 65) (as amended by S.I. 2019/1212, regs. 1(3), 20(3)(4) and with savings in S.I. 2019/680, reg. 11); 2020 c. 1, Sch. 5 para. 1(1)