The Benchmarks (Amendment and Transitional Provision) (EU Exit) Regulations 2019

Critical benchmarks: amendments to Article 20 U.K.

16.—(1) Article 20 is amended as follows.

(2) For the heading substitute “ Critical benchmarks: conditions and other matters ”.

[F1 (2A) Before paragraph 1 insert—

“A1.   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).”.]

(3) In paragraph 1—

(a) for the opening words substitute “ The conditions are: ”;

(b) in point (b)—

(i) for “one Member State” substitute “ the United Kingdom ”;

(ii) omit “in that Member State”;

(c) in point (c), at (iii), for “one or more Member States” substitute “ the United Kingdom ”;

(d) omit the words from “If a benchmark meets” to the end.

(4) For paragraph 2 substitute—

“2.   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.”.

(5) In paragraph 3—

(a) in the first subparagraph—

(i) in the opening words—

(aa) for “competent authority”, where first occurring, substitute “ FCA ”;

(bb) for “its Member State” substitute “ the United Kingdom ”;

(cc) for “competent authority”, where second occurring, substitute “ FCA ”;

(ii) in points (a) to (c), for “Member State”, each time it occurs, substitute “ United Kingdom ”;

(b) omit the second subparagraph.

(6) In paragraph 4, for the words from “ESMA” to the end substitute “ the Treasury must determine whether the FCA's assessment complies with the requirements of paragraph 3. ”.

(7) For paragraph 5 substitute—

“5.   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 determines that the FCA's assessment complies with the requirements of paragraph 3.”.

(8) Before paragraph 6 insert—

“5A.   The FCA must:

(a) review the values in points (a) and (c)(i) of paragraph 1 (the “thresholds”) 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 to the thresholds; and

(b) provide a written report to the Treasury setting out the results of the review and making a recommendation as to whether the thresholds 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 [F2 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.”.

(9) In paragraph 6—

(a) for the opening words substitute “ The Treasury may by regulations ”;

(b) for point (b) substitute—

“(b) amend the thresholds in points (a) and (c)(i) 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) in point (c), for “one or more Member States” substitute “ the United Kingdom ”;

(d) in the second subparagraph, for “Commission” substitute “ Treasury ”.

Textual Amendments

F1 Reg. 16(2A) inserted (31.12.2020 immediately before IP completion day) by The Securities Financing Transactions, Securitisation and Miscellaneous Amendments (EU Exit) Regulations 2020 (S.I. 2020/1385), regs. 1(4), 58(7)

F2 Words in reg. 16(8) substituted (30.12.2020) by The Financial Services and Economic and Monetary Policy (Consequential Amendments) (EU Exit) Regulations 2020 (S.I. 2020/1301), regs. 1, 3, Sch. para. 34(c)

Commencement Information

I1 Reg. 16 in force at 31.12.2020 on IP completion day (in accordance with 2020 c. 1, Sch. 5 para. 1(1)), see reg. 1(2)