UK BENCHMARKS

REGULATION

THE UK BENCHMARKS REGULATION IN BRIEF

Most indices used by UK market participants must be authorised by the Financial Conduct Authority, from 1/1/2022 if provided by UK-based administrators, and from 1/1/2026 if provided by non-UK-based administrators, in order for that usage to continue.

In the period between 2022 and 2026, third-country administrators may still obtain authorisation, and may wish to do so for reasons of competiveness. A number of uses are covered:

For existing arrangements to continue, third country index providers whose indices are used in any of the ways noted above will have to either seek recognition as a third country index provider, or endorsement of their indices. Without one or the other, any existing usage has to cease by 1/1/2026.

RECOGNITION OF THIRD COUNTRY INDEX PROVIDERS

Under this option, the index provider applies to the UK FCA for “recognition”. As part of its application, it is required to demonstrate it has a contractual agreement with a UK-based “legal representative” that takes on the legal risk of providing benchmarks within the UK, and that together with the index provider, “oversees” the provider’s indices. Moorgate Benchmarks offers this service.

PRO:

CON:

ENDORSEMENT OF INDICES FROM THIRD COUNTRY PROVIDERS

Under this option, Moorgate Benchmarks Limited applies to its regulator, the UK FCA, to endorse an index provider’s indices as suitable for use within the UK. Moorgate takes on an oversight role together with the index provider.

PRO:

CON:

MOORGATE BENCHMARKS EXPERIENCE

We are a regulated benchmark administrator under the EU Benchmarks Regulation and will be a regulated benchmark administrator under the UK Benchmarks Regulation when it comes into effect. We have successfully worked with EU and non-EU benchmark administrators to design and document their processes and procedures, and to build and submit their applications under the EU Benchmarks Regulation.
We are the legal representative to the first successful American index provider to gain authorisation (under the recognition process) as a third country (non-EU) benchmark administrator, and are working with other administrators from around the globe to provide recognition or endorsement of their index businesses.

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