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Financial services providers & Crowdfunding Benchmark administrators

Benchmark administrators

Published on February 26, 2018

The administration of indices used as benchmarks is subject to Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 (the Benchmarks Regulation). Following the manipulation of a number of indices, the Regulation aims to restore confidence in financial benchmarks by laying down a regulatory framework at European Union level covering the provision, contribution and use of benchmarks. The Regulation comes into effect on 1 January 2018.

What is a benchmark administrator?

The Benchmarks Regulation defines an index as "any figure:

  1. that is published or made available to the public;
  2. that is regularly determined:
  • entirely or partially by application of a formula or any other method of calculation, or by an assessment; and
  • on the basis of the value of one or more underlying assets or prices, including estimated prices, actual or estimated interest rates, quotes and committed quotes, or other values or surveys".

A benchmark means any index "by reference to which the amount payable under a financial instrument or a financial contract, or the value of a financial instrument, is determined, or an index that is used to measure the performance of an investment fund with the purpose of tracking the return of such index or of defining the asset allocation of a portfolio or of computing the performance fees".

A benchmark administrator within the meaning of the Benchmarks Regulation is a "natural or legal person that has control over the provision of a benchmark".

Provision of a benchmark means "administering the arrangements for determining a benchmark, collecting, analysing or processing input data for the purpose of determining a benchmark; and determining a benchmark through the application of a formula or other method of calculation or by an assessment of input data provided for that purpose".

Benchmarks Regulation requirements for benchmark administrators

The Benchmarks Regulation introduces requirements for benchmark administrators who must comply with rules on governance, conflicts of interest, the introduction of controls, benchmark transparency to users and investors and the introduction of a code of conduct for contributors.

Benchmarks Regulation requirements reflect the importance of the benchmark concerned, i.e. on whether the benchmark is critical, significant or non-significant. Special requirements also apply to interest rate and commodity benchmarks, supplementing or replacing the main requirements of the Benchmarks Regulation.

Critical and significant benchmarks are defined in articles 20 and 24 of the Benchmarks Regulation. A benchmark is non-significant if it does not fulfil the conditions for consideration as a critical or significant benchmark.

Administrators must be authorised or registered by their competent national authority if they are located in the European Union, or via one of the three third country methods if they are established outside the European Union, to ensure that the indexes they provide can be used in the European Union.

AMF is the competent authority for France.

As of 1 January 2018, ESMA will maintain a public register on its website that contains:

  • the identities of authorised or registered administrators located in the European Union;
  • the identities of administrators located in third countries who meet equivalence requirements and a list of their benchmarks that can be used in the European Union;
  • the identities of administrators located in third countries who have been recognised by the competent authority of their Member State of reference and a list of their benchmarks that can be used in the European Union;
  • a list of benchmarks provided by a third country administrator that have been endorsed by an administrator located in the European Union for use in the European Union.

The register will enable supervised entities that use benchmarks to check that, pursuant to article 29 of the Benchmarks Regulation, those benchmarks have been provided by administrators that are authorised or registered by ESMA or, if the benchmark is provided by an administrator located in a third country, that the benchmark itself is registered by ESMA.

AMF authorisation or registration of benchmark administrators

Natural and legal persons located in France that wish to act as administrators must apply to AMF for authorisation or registration. The type of application will depend on the importance of the benchmarks provided and on the status of the applicant, as shown below.

Category of benchmark provided Entity supervised by AMF (investment firm, AMC, market operator, etc.) Entity not supervised by AMF
At least one critical benchmark Authorisation Authorisation
At least one significant benchmark but no critical benchmark Registration unless benchmark provision is prohibited under sector regulations applying to the entity Authorisation
Non-significant benchmarks only Registration Registration

Authorisation and registration procedures are described in article 34 of the Benchmarks Regulation. AMF must issue a decision on authorisation requests within four months of receipt of a complete file, and on registration requests within forty-five days of receipt of a complete file.

Entities supervised by AMF

Investment firms, asset management companies and market operators wishing to apply for authorisation or registration as a benchmark administrator must first contact their portfolio manager before posting a hard copy of their authorisation or registration request file to AMF and also e-mailing it to benchmark@amf-france.org.

The file must include the information listed in annex I or, where relevant, annex II to the delegated regulation to be adopted by the European Commission based on the RTS published by ESMA on 30 March 2017.

Details for investment firms are shown in instruction DOC-2014-01.

Details for asset management companies are shown in instruction DOC-2008-03.

Entities not supervised by AMF

Entities that are not supervised by AMF but wish to apply for authorisation or registration as a benchmark administrator must contact AMF at benchmark@amf-france.org before they submit their file.

The file must then be e-mailed to AMF at the same address and also posted to it in hard copy. The file must include the information listed in annex I or, where relevant, annex II to the delegated regulation to be adopted by the European Commission based on the RTS published by ESMA on 30 March 2017.

Transition period

Article 51 of the Benchmarks Regulation sets out transitional provisions that enable entities located in the European Union and providing benchmarks at 30 June 2016 to apply for authorisation or registration by 1 January 2020.

Natural and legal persons that cannot avail themselves of the transitional provisions must be authorised or registered before they can operate as benchmark administrators and so that the benchmarks they provide can be used by supervised entities in the European Union.

An ESMA question and answer document gives additional details of the transitional provisions in the Benchmarks Regulation.

Special procedure for use in the European Union of benchmarks provided by benchmark providers located in a third country

Before a benchmark provided by a benchmark administrator located in a third country can be used in a Member State of the European Union, the European Commission must adopt an equivalence decision for its country of origin, pursuant to article 30 of the Benchmarks Regulation.

If there is no equivalence decision:

  • the administrator must obtain prior recognition from the competent authority located in the European Union, pursuant to article 32 of the Benchmarks Regulation; or
  • the benchmark provided must be endorsed by an administrator located in the European Union through the competent national authority for that administrator, pursuant to article 33 of the Benchmarks Regulation.

Article 51 of the Benchmarks Regulation also includes transitional provisions that allow benchmarks provided by an administrator located in a third country and already in use in the European Union to continue to be used in new contracts, financial instruments and investment funds until 1 January 2020 while awaiting an equivalence decision or preliminary recognition or endorsement.

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Legal information
Head of publications: The Executive Director of AMF Communication Directorate.
Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02