Industry Updates

European Commission to ‘significantly reduce’ scope of BMR

Concerns over the potential impact on financial stability

Theo Andrew

EU capital markets CMU consolidated tape

The European Commission is proposing to “significantly reduce” the scope of its Benchmark Regulation (BMR) following concerns about the impact on financial stability.

In proposals published on 17 October, the European Commission outlined a new “simplified” approach to third-country benchmarks in the EU, covering those which are “significant or critical to the European Union’s financial markets”.

It comes as Europe’s governing body delayed the introduction of BMR in July, moving it from 31 December 2023 to the same date in 2025 as it would “pose a risk to financial stability”.

Under the new scope, only those that provide benchmarks between €50bn and €500bn will be subject to the BMR’s registration process.

In addition, EU Climate Transition Benchmarks and Paris-Aligned Benchmarks, as well as non-EU benchmarks that meet these thresholds, will also be in scope.

Index providers will be required to comply with governance arrangements, oversight functions, conduct standards and reporting and disclosure requirements.

Gregory Campbell, partner at PwC, said: “The proposal ensures benchmark users will continue to have access to the majority of non-EU benchmarks, as those that fall below the thresholds for being designated as significant or critical will be out of scope of the BMR.

“The effect of the proposal is to significantly reduce the regulatory burden on administrators of benchmarks that are not economically significant in the EU by taking them out of scope.”

The proposals would still need to go through the European legislative process, with the new rules set to apply from 1 January 2026.

In January, the European Securities and Market Authority (ESMA) and the Financial Conduct Authority (FCA) signed a Memorandum of Understanding (MoU) to enable ESMA to start recognising benchmark administrators from the UK.

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