HM Treasury consults on new regime for UK benchmarks

HM Treasury (HMT) has launched its consultation on the repeal and replacement of the UK Benchmarks Regulation (UK BMR), which would replace the UK BMR regime with a new Specified Authorised Benchmark Regime. The new regime would focus regulatory oversight on benchmarks and administrators that may pose systemic risks to UK markets, removing the current obligation for authorised firms to use benchmarks on the FCA register.

HMT would designate benchmarks and administrators as "specified", taking advice from the UK Financial Conduct Authority (FCA), and publish those designations; the FCA would then set and consult on firm‑facing requirements. The consultation does not propose any voluntary opt-in regime. The scope of the regime would depend on whether benchmarks and administrators satisfied criteria which would be set in legislation.

Benchmarks would be designated depending on the benchmark's (potential) impact on the integrity of the UK financial system and/or the impact on the market, considering: (i) whether the benchmark is substitutable; and (ii) the impact if it becomes unavailable or relies on an unrepresentative database. Administrators would be designated by HMT on the basis of the aggregated (potential) impact of the benchmarks administered by a firm. For overseas benchmarks, the current equivalence framework would be replaced with an overseas recognition regime, with HMT seeking feedback on whether the current endorsement and recognitions should be replicated under the new regime.

The FCA confirmed that it welcomes the reform of the UK Benchmarks Regulation but has not yet confirmed any specific timings on any consultation on the new rules, merely stating that it will consult in "due course", with the Regulatory Initiatives Grid indicating that the regulator will not be consulting until the second half of 2027 at the earliest.

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