Overview
The European Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (the EU BMR) applied from 1 January 2018 and was directly applied in the UK from 1 January 2018. The EU BMR as amended is retained EU law in the UK (UK BMR) and took effect in the UK at the end of the EU Exit Transition Period on 31 December 2020.
The EU BMR introduced a common framework to ensure the accuracy and integrity of indices used as benchmarks in the European Union. The EU BMR applies to the:
- provision of benchmarks
- contribution of input data to a benchmark
- use of a benchmark within the European Union
Under the EU BMR, only the following types of benchmarks may be used by supervised entities within the European Union:
- Benchmarks that are provided by EU based administrators who have been granted authorisation or registration under the EU BMR and who are identified on the register maintained by the European Securities and Markets Association (ESMA)
- Subject to the third country transitional provisions which expire on 31 December 2025, benchmarks that have been entered onto the ESMA register, which are provided by third country administrators who have either:
- satisfied the requirements for equivalence, or
- acquired recognition under the EU BMR, or
- successfully sought endorsement from an EU authorised or registered administrator or other supervised entity for specific benchmarks.
EU BMR Review:
The European Commission has published a proposal for a regulation amending the EU BMR as part of a package of measures to rationalise reporting requirements. We will continue to engage with policymakers as they review the scope of EU BMR and bring targeted improvements to how the EU BMR functions.
The UK BMR reflects the provisions of the EU BMR. The UK BMR applies to the:
- provision of benchmarks
- contribution of input data to a benchmark
- use of a benchmark within the United Kingdom
Under the UK BMR, only the following types of benchmarks may be used by supervised entities within the UK:
- Benchmarks that are provided by UK based administrators who have been granted authorisation or registration under the UK BMR and who are identified on the register maintained by the Financial Conduct Authority (FCA)
- Subject to the third country transitional provisions which expire on 31 December 2030, benchmarks that have been entered onto the FCA register, which are provided by third country administrators who have either:
- satisfied the requirements for equivalence, or
- acquired recognition under the UK BMR, or
- successfully sought endorsement from an UK authorised or registered administrator or other supervised entity for specific benchmarks.
FTSE International Limited authorised as a benchmark administrator by the Financial Conduct Authority
The UK’s Financial Conduct Authority (FCA) has granted FTSE International Limited authorisation as a benchmark administrator and FTSE International Limited is listed on the FCA Benchmarks Register. This authorisation is comprehensive across asset classes, and covers the FTSE, Russell, FTSE Canada equity and fixed income indices that are known to be used as benchmarks in the United Kingdom. With regard to the UK’s departure from the EU, the third country transitional provisions provide for continued provision of benchmarks administered by FTSE International Limited as a non-EU based administrator up until 31 December 2025. The fixed income indices acquired from Citigroup Indices LLC in August 2017 will continue to be administered by the US-based entity, FTSE Fixed Income LLC, according to the EU BMR’s and UK BMR’s third country transitional provisions.
Supporting clients
FTSE Russell fully supports the focus of the EU BMR and the UK BMR and is committed to ensuring compliance of its relevant benchmarks with the EU BMR and the UK BMR.
If you have any specific questions, please let us know.
