Despite its importance to third country administrators and the difficulties they’ve faced due to regular, significant changes to its implementation, the EU has again appended a significant change to their EU BMR situation onto an announcement about the end of LIBOR.
What’s new:
Discussions have been ongoing since early this year regarding the 31st December 2021 end of the transition period. Despite the EU Commission’s original plan to maintain certainty around that date, and a significant number of briefings to that end, the EU Council recently proposed an extension to the end of 2025. The EU Parliament has now agreed with the Council an extension… but to the end of 2023!
The EU prepares for the end of LIBOR (europa.eu)
This does at least bring some certainty, and importantly, also indicates the general direction of regulatory travel. Even though it came under intense pressure to reduce the scope of the BMR and to extend the transition period for five years, the EU didn’t do either, instead only extending the transition period by two years. Although the EU could decide to extend again, the timeframe that’s required to prepare for and submit an application – realistically, more than a year – in our view brings this to a conclusion now, and administrators who have been awaiting certainty, now have as much certainty as they are going to get.
What this means for third country administrators:
Now it’s clear the BMR isn’t going away, third country administrators will need to solidify their plans. The routes open are:
To transfer the formal administration of benchmarks to an entity in the EU, such as Moorgate Benchmarks GmbH.To apply for recognition to ESMA. (Note that ESMA is proposing extremely high, non-refundable application fees, for this route.)To work with an EU benchmark administrator to gain endorsement for the relevant benchmarks.
There are positives and negatives to each route. Moorgate is working with administrators who are taking all three routes, and would be happy to explain the upsides and downsides of each.
If you would like to discuss which route might be appropriate for you, get in touch with us via info@moorgatebenchmarks.com.
Third country administrators whose benchmarks are used in both the UK and EU:
Third country administrators with benchmarks that are used within both the UK and EU should consider how they achieve authorisation in both jurisdictions. Directly facing two separate regulations and regulators is a difficult proposition, and therefore Moorgate’s clients are generally considering three routes:
Transferring the formal administration of benchmarks to Moorgate Benchmarks, for administration in either the UK or EU (via either Moorgate Benchmarks Ltd, or Moorgate Benchmarks GmbH), with the other Moorgate entity endorsing those benchmarks in the other jurisdiction.Applying for recognition in one jurisdiction, and then having their benchmarks endorsed in the other. In this instance Moorgate provides the legal representation service for the recognition application, and the endorsement in the other jurisdiction.Gaining endorsement for their benchmarks in both jurisdictions.
Moorgate is happy to help administrators work through their options and reach a conclusion. Please contact us to arrange a discussion.