The European Commission published its proposal for the introduction of supervision of the formation of benchmarks on 18 September. This proposal is in response to the manipulation of benchmarks of widely-applied interbank interest rates, such as Libor. This manipulation has seriously undermined confidence in the fair operation of the financial markets.
It is expected that this proposal will contribute to a fair, transparent and more accurate formation of benchmarks. The proposal offers a common legal framework to all the various parties involved in the process of the formation of benchmarks, such as the parties that provide input, assume the administration and/or publish the benchmark. It focuses in particular on good governance, methodology and the underlying data of benchmarks that are to be used. In addition to the rules themselves, supervision of correct compliance is also introduced.
Now that the proposal of the European Commission has been published, in the shape of a regulation, the next step is for the Council of Ministers and the European Parliament to become involved in the legislative procedure with the ultimate goal of consenting thereto.
In view of the urgency of the proposal, the Netherlands Authority for the Financial Markets (AFM) is in favour of an introduction date that is as soon as possible. This is in the interest of fair and transparent financial markets and the essential recovery of confidence in the important benchmarks.
More information about the proposal
- Press release from the European Commission
- Proposal for a Regulation of the European Parliament and of the Council on indices used as benchmarks in financial instruments and financial contracts
In its proposal, the European Commission assumed the principles that were drawn up in June 2013 by the European Securities and Markets Authority (ESMA) and by the European Banking Authority (EBA) and by the International Organization of Securities Commissions (IOSCO) in July 2013. As a member of the executive board of ESMA and IOSCO, the AFM has made an active contribution to the formation of these principles.
More information about the principles and analyses of IOSCO and ESMA/EBA
- Principles for Financial Benchmarks (IOSCO)
- Final report of the ESMA-EBA Task Force on Principles for Benchmarks
- Principles for Benchmarks (ESMA/EBA)
The AFM is committed to promoting fair and transparent financial markets.
As an independent market conduct authority, we contribute to a sustainable financial system and prosperity in the Netherlands.