EU BMR update just on time; I did not see it!

BMR update has been published on 27 November 2019; its main effect that were to take effect one month later have been delayed by 2 years. The full text is available on EUR-lex: https://eur-lex.europa.eu/eli/reg/2019/2089/oj

The natural question here is: Marc, have you been asleep since 27 November that you did not notice this very important piece of legislation being published? The answer is: Yes, I have been asleep part of the time, usually at night. Actually I had read the title of that piece of legislation but I deemed it to be of no importance for interest rate benchmark transition. As a (weak) defense to my failure to see the significance of this piece of legislation, I will only present the title of the document published on the Official Journal of the European Union: REGULATION [...] amending Regulation (EU) 2016/1011 as regards EU Climate Transition Benchmarks, EU Paris-aligned Benchmarks and sustainability-related disclosures for benchmarks.

Yes you read that correctly. A major change on critical interest rate benchmark is hidden there, behind climate related benchmark items. Actually it is under the point (25) out of 26 of the "whereas".

Now that I know where to look at it, I can report on it.

The relevant amendments are the (4), (5) and (9).

Amendment (4) and (5) includes "The maximum period of mandatory administration shall not exceed five years"  and "The maximum period of mandatory contribution under points (a) and (b) of the first subparagraph shall not exceed five years". 
So if regulators decide that EURIBOR has to be continued, they (the Belgian FSMA in the EURIBOR case) can ask it to continue for up to 5 years. That makes the discontinuation of EURIBOR before 2027 quite unlikely.

Amendment (9) includes "An index provider may continue to provide an existing benchmark that has been recognised as a critical benchmark [...] until 31 December 2021" and "An existing benchmark that has been recognised as a critical benchmark [...] may be used for existing and new financial instruments, financial contracts, or for measuring the performance of an investment fund until 31 December 2021". Which means that we have two more years to see the real impacts of BMR.

To my knowledge, the current critical benchmarks (with their administrators) are (Official Journal of the European Union - L 82/26 - 25.3.2019):
  • EURIBOR (EMMI)
  • EONIA (EMMI)
  • LIBOR (IBA)
  • STIBOR (Svenska Bankföreningen)
  • WIBOR (GPW Benchmarks S.A.)
The following administrator of above benchmarks are registered with ESMA (Name - autorisation - supervisor)
  • EMMI  - Authorisation under Art. 34 - Financial Services and Markets Authority (FSMA)
  • IBA - Authorisation under Art. 34 - Financial Conduct Authority (FCA)
  • GPW Benchmarks S.A. - Authorisation under Art. 34 - Polish Financial Supervisory Commission
The following administrators of non-critical benchmarks have registered recently (benchmark - administrator - Supervisor - Registration date)
  • CIBOR - DFBF - Danish financial regulator, Finanstilsynet - 12 December 2019
  • NIBOR - NoRe (Norkse Finansielle Referanser AS) - Norwegian Financial Supervisory Authority/Finanstilsynet - 12 December 2019




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