UK Government Consults On Broadening The Benchmark Regulatory Perimeter

Author:Shearman & Sterling LLP
Profession:Shearman & Sterling LLP
 
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On September 25, 2014, the UK Government launched a consultation on the first set of recommendations from the Fair and Effective Markets Review, which recommended that additional major financial benchmarks should be brought into the regulatory framework for benchmark administrators. The Fair and Effective Markets Review is led by the Bank of England, the Financial Conduct Authority ("FCA") and HM Treasury. The final report of the Review is due to be published in June 2015. The benchmarks proposed for inclusion in the UK regulatory perimeter are Sterling Overnight Index Average, Repurchase Overnight Index Average, WM/Reuters' FX benchmark rates, ISDAFix, ICE Brent Futures, LBMA Silver Price and the London Gold Fix. There are three criteria for benchmarks to be included in the UK regime, which are: (i) the benchmark must be a major benchmark, which means that it is one that has the greatest usage within the main fixed-income, currency and commodity product markets; (ii) the main benchmark administration activities must be located in the UK; and (iii) the benchmark is based on transactions in financial instruments which are not covered comprehensively by existing market abuse regulation. The consultation closes on October 23, 2014. The consultation paper and other information is available at: https://www.gov.uk/government/consultations/fair-and-effective-market-reviews-benchmarksto-bring-into-uk-regulatory-scope. The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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