Print from the website of the AMF
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.
The Benchmarks Regulation defines an index as "any figure:
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".
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 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.
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.
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 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.
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.
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:
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.
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