The new set of legislation around the management of benchmarks is moving towards entry into force, with the agreement last year between the trialogue around the legislation announced here on the Commission web site. Following this the FCA have now created this web page that brings together information on the rules.
The rules are intended to further regulate the management of benchmarks, in addition to the general anti abuse measures found in rules such as MAR and REMIT. In addition to giving NCAs sanctioning powers, the regulations set out rules for the administration of and contribution to the setting of benchmarks, including those applying to the energy and commodity markets.
Rules for administrators depend on whether the benchmark is considered to be “critical”, which is defined by the value on which the benchmark depends. Rules for contributors partly depend on whether the contributor is already supervised, i.e. under financial supervision. In the world of commodities and energy this will partly be driven by whether the market participant is under MiFID II, which would be defined by the ancillary activity tests.
The topic of index manipulation has been frequently seen in the headlines in recent months, and we can therefore expect to be hearing more as the legislation moves towards its entry into force. The proposed text of the rules can be found here.