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BMR EU Background:

  • The final compromise text of the European Benchmarks Regulation (“BMR”) was approved by the European Council on 9 December 2015.
  • The Regulation addresses concerns raised by the manipulation of interest rate benchmarks such as the London Interbank Offered Rate (LIBOR), the Euro Interbank Offered Rate (EURIBOR) and the Tokyo Interbank Offered Rate (TIBOR).
  • BMR must be fully implemented by January 2020.

Who does this apply to?

  • Contribution of input data to a benchmark across Banks, Asset Managers, Insurance
  • Use of a benchmark within the European Union
  • EU Benchmark Regulation (EU BMR) will have a major bearing on market participants across Asia Pacific

How?

  • Manage conflicts of interest inherent to certain investment processes
  • Supervised entities must not use unregistered benchmarks in the EU
  • Improve governance and controls over the benchmark process
  • Protect consumers and investors through greater transparency and adequate rights of redress

Impacts?

  • BMR is a highly complex regulation with implications for all market participants
  • Requirements have a direct impact on the usage of benchmarks, provision of input data, and cross-border market access
  • Identify what products are using third party indices, along with making clients aware by contingency plans in product documentations e.g. fall back scenario defining what index should be used as a reference if the initial benchmark can no longer be used.

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