The EACB has answered the call for evidence being undertaken by the European Commission on the review of the scope and regime for non-EU benchmarks under the EU Benchmarks Regulation (BMR), because discussion with our members indicates that European co-operative banks regularly use third country benchmark rates in their contracts, and thus regulatory action is important to safeguard financial stability, market integrity and the real economy in the EU when it comes to use of third-country benchmarks.
In order to ensure for co-operative banks that any BMR review maintains their continued access to third country benchmarks, but also creates a level playing field between EU and non-EU benchmarks, we call for the below recommendations to be upheld:
- In the short term:
- an extension of the temporary suspension of the BMR third-country regime under Article 51 (5) BMR until 1 January 2026;
- the need for a positive designation regime of only systemically important EU and Third Country benchmarks to be in the scope of BMR for mandatory compliance (in particular we support the inclusion of TORF on this list); and
- In the longer term, the European Commission should work to align the BMR on a more global level, so as not to drive benchmark administrators from third countries out of the EU market.
On benchmark labels, the EACB understands the rationale behind extending the positive designation regime also in the case of label related BMR provisions, but we recommend:
- the European Commission to exercise caution when developing the proposed regulation behind this alignment in that it does not hamper access to non-EU ESG benchmarks and innovation in the market of green products with respect to the EU Climate Transition Benchmarks or EU Paris-Aligned Benchmarks, and eventually for an EU ESG Benchmark if adopted; and
- At the very least, the creation of an EU ESG benchmark label is not made part of this current BMR review proposal, since clarity is still necessary in terms of some outstanding issues to be resolved under the SFDR and work on the EFRAG European Sustainability Reporting Standards is still being carried out.
Please download our position paper for further evidence backing up the above.