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Bovill, the international financial services regulatory consultancy, has responded to yesterday’s consultation paper from the FCA on updating its handbook to reflect incoming EU Benchmarks Regulation (BMR). The next and most important phase of the regulation, which will be applicable from 1 January 2018, creates a host of new requirements for administrators, contributors and users of benchmarks. Potentially hundreds of firms could be affected as they will have to create internal systems to govern, control, monitor and record the processes by which they administer, contribute data to or use benchmarks.
Tobias Sproehnle, Consultant at Bovill, said:
“This consultation paper provides some welcome clarity for the many firms who stand to be affected by this new regulation, which has so far flown under the radar, yet has wide-reaching implications
“For example, we welcome the clarification that the FCA is assuming the transition period from existing rules to new ones applies to all benchmarks created before 1 January 2018. When it comes to fees, many smaller benchmark administrators are likely to be encouraged by the proposed fee structure for administration.
“That said, there are still numerous areas where further clarity would be beneficial. We still don’t know the FCA’s view on the point at which a composite benchmark should be considered a new benchmark – or what making a benchmark “publicly available” means.”
Gareth Parker, Consultant at Bovill, adds:
“The FCA plans to consider the responses to this consultation and publish its rules in a policy statement in October. That is encouraging, because time is ticking. All benchmark administrators, submitters and users should read this new consultation carefully to gain a better understanding of their exposure to the new EU Benchmarks Regulation.
“Then it is a case of ensuring processes are in place to rigorously implement the final rules, before applying for authorisation. The FCA’s intent to accept draft authorisation applications from October will allow the best prepared firms to complete the process more rapidly than was previously going to be the case.
“Interpretation of the final rules may be difficult, but the FCA has now set out a timetable and those who delay achieving compliance will be at risk.”
To deal with the increased demand for support in implementing this new regulation, Bovill has just launched a new benchmarks proposition. Heading up the team is Tobias Sproehnle, ex-Global Head of Benchmark Services at Thomson Reuters, and Gareth Parker, ex-Senior Director of Index Research, Design & Development at FTSE Russell.
