What changed between the draft committee report and the plenary report

Change 2

Removed:SHORT JUSTIFICATION

Added:AMENDMENTS BY THE EUROPEAN PARLIAMENT*

Removed:The Council position at first reading reflects the agreement reached between Parliament and the Council in interinstitutional negotiations at early second reading stage, after legal-linguistic verification. Since the Committee on Economic and Monetary Affairs (ECON), in its vote on 16 January 2025, already confirmed the outcome of those interinstitutional negotiations, as your rapporteur, I propose that ECON recommends that the Plenary confirms the position of the Council at first reading without amending it.

Added:to the Commission proposal

Added:---------------------------------------------------------

Added:2023/0379 (COD)

Added:Proposal for a

Added:REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

Added:amending Regulation (EU) 2016/1011 as regards the scope of the rules for benchmarks, the use in the Union of benchmarks provided by an administrator located in a third country, and certain reporting requirements

Added:(Text with EEA relevance)

Added:THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Added:Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 thereof,

Added:Having regard to the proposal from the European Commission,

Added:After transmission of the draft legislative act to the national parliaments,

Added:Having regard to the opinion of the European Central Bank,

Added:Having regard to the opinion of the European Economic and Social Committee,

Added:Acting in accordance with the ordinary legislative procedure,

Added:Whereas:

Added:(1) Reporting requirements play a key role in ensuring proper monitoring and correct enforcement of legislation. However, it is important to streamline those requirements in order to ensure that they fulfil the purpose for which they were intended and to limit the administrative burden.

Added:(2) Under Regulation (EU) 2016/1011 of the European Parliament and of the Council, all administrators of benchmarks, regardless of the systemic relevance of those benchmarks or of the amount of financial instruments or contracts that use those benchmarks as reference rates or as performance benchmarks, are to comply with several very detailed requirements, including requirements on their organisation, on the governance and conflicts of interest, on oversight functions, on input data, on codes of conduct, on reporting of infringements, and on methodological and benchmark statement disclosures. Those very detailed requirements have put a disproportionate regulatory burden on administrators of smaller benchmarks in the Union considering the aims of Regulation (EU) 2016/1011, that is to safeguard financial stability and to avoid negative economic consequences that result from the unreliability of benchmarks. It is therefore necessary to reduce that regulatory burden by focusing on those benchmarks with the greatest economic relevance for the Union market, i.e. significant and critical benchmarks, and on those benchmarks that contribute to the promotion of key Union policies, i.e. EU Climate Transition and EU Paris-aligned Benchmarks. For that reason, the scope of application of Titles II, III, IV and VI of Regulation (EU) 2016/1011 should be reduced to those specific benchmarks.

Added:(2a) Benchmark administrators who wish to remain within the scope of Regulation (EU) 2016/1011 should have the option to request voluntary supervision even if their benchmarks do not meet the threshold of a significant benchmark or they are not designated as significant. Likewise, benchmark administrators whose benchmarks do not meet the threshold of a significant benchmark and who wish to obtain a regulatory licence under Regulation (EU) 2016/1011 should not be prohibited from doing so.

Added:(3) Under Article 18a of Regulation (EU) 2016/1011, the Commission can exempt certain spot foreign exchange benchmarks from the scope of that Regulation to ensure their continued availability for use in the Union. In view of the need for a revised and narrower focus of Regulation (EU) 2016/1011 on critical benchmarks, significant benchmarks, EU Climate Transition Benchmarks and EU Paris-Aligned Benchmarks, there is no longer a need for the specific exemption regime for spot foreign exchange benchmarks.

Added:(4) Pursuant to Article 19d of Regulation (EU) 2016/1011, administrators of significant benchmarks are required to endeavour to provide an EU Climate Transition Benchmark or an EU Paris-aligned Benchmark to establish minimum standards for climate benchmarks and to provide a comprehensive supply of climate indices in the Union.

Added:(5) The criteria for assessing whether a benchmark is a significant benchmark are currently laid down in Article 24 of Regulation (EU) 2016/1011. Benchmarks will be considered to be significant, inter alia where they meet the threshold laid down in Article 24(1), point (a), of that Regulation.

Added:(6) Benchmark administrators should monitor the use in the Union of the benchmarks they provide and notify the competent authority concerned or the European Securities and Markets Authority (ESMA), depending on where that administrator is located, that the aggregate use of one of their benchmarks has exceeded the threshold laid down in Article 24(1), point (a), of Regulation (EU) 2016/1011. However, it is challenging to calculate such a threshold, especially at Union level. To ensure the consistent implementation of that threshold ESMA should develop draft regulatory technical standards to specify further the calculation method. Furthermore, administrators of benchmarks used in the Union should endeavour to obtain a globally agreed identifier code to identify their benchmarks.

Added:(6a) To ensure that benchmark administrators have sufficient time to adapt to the requirements that apply to significant benchmarks, they should only be subject to those requirements as from 60 working days from the day they submitted such a notification. In addition, benchmark administrators should provide the competent authorities concerned or ESMA, upon request, with all information necessary to assess that benchmark’s aggregate use in the Union.

Added:(6b) Where a benchmark administrator omits or refuses to notify the competent authorities that the use of one of its benchmarks has exceeded the threshold laid down in Article 24(1), point (a), of Regulation (EU) 2016/1011, and where the competent authorities have clear and demonstrable grounds to consider that the threshold has been exceeded, the competent authorities concerned or ESMA, as appropriate, should be able to declare that the threshold has been exceeded, having first given the administrator the opportunity to be heard. Such declaration should trigger the same obligations for the benchmark administrator as a notification by the benchmark administrator. This should be without prejudice to the ability of competent authorities or ESMA to impose administrative sanctions on administrators that fail to notify that one of their benchmarks has exceeded the applicable threshold.

Added:(7) Markets, prices and the regulatory environment evolve over time. To take those evolutions into account, the Commission should be empowered to further specify the methodology to be used by administrators and competent authorities to calculate the total value of financial instruments, financial contracts or investment funds referencing a benchmark.

Added:(8) However, in exceptional cases, there may be benchmarks with an aggregate use below the threshold laid down in Article 24(1), point (a), of Regulation (EU) 2016/1011 which, due to the specific situation in the market of a Member State, are nevertheless of such importance to that Member State that any lack of reliability would be of comparable impact as that of a benchmark the usage of which exceeds that threshold. For that reason, the competent authority of that Member State should be able to designate such a benchmark, where that benchmark is provided by an EU administrator, as significant on the basis of a set of qualitative criteria. For benchmarks provided by a non-EU administrator, it should be ESMA that, on the request of one or more competent authorities, designates such a benchmark as a significant benchmark.

Added:(9) To ensure the consistency and coordination of national designations of benchmarks as significant benchmarks, competent authorities intending to designate a benchmark as significant should consult ESMA. For the same reason, a competent authority of a Member State that intends to designate as significant a benchmark that is provided by an administrator that is located in another Member State should also consult the competent authority of that other Member State. Where competent authorities disagree which among them should designate and supervise a benchmark, ESMA should settle that disagreement in accordance with Article 19 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council.

Added:(10) To respect the right to be heard, a competent authority or ESMA should, before designating a benchmark as significant, allow the administrator of that benchmark to provide any useful information relevant to its designation.

Added:(11) For the designation as a significant benchmark to be as transparent as possible, competent authorities or ESMA should issue a designation decision containing the reasons why that benchmark is considered significant. Competent authorities should publish the designation decision on their website and should notify that decision to ESMA. For the same reasons, where ESMA designates a benchmark as significant upon a request of a competent authority, ESMA should publish the designation decision on its website and should notify the requesting competent authority thereof.

Added:(12) EU Climate Transition Benchmarks (EU-CTB) and EU Paris-aligned Benchmarks (EU-PAB) are specific categories of benchmarks, defined by their compliance with rules governing their methodology and the disclosure requirements of their administrators▌. For that reason, and to prevent claims that could lead users to think that such benchmarks are compliant with the standards attached to those labels, it is necessary to subject those benchmarks to mandatory registration, authorisation, recognition or endorsement, as appropriate, and to supervision.

Added:(12a) The regulatory treatment of commodity benchmarks should be tailored to their specific characteristics. Commodity benchmarks that are subject to the general rules for financial benchmarks should be treated identically to other financial benchmarks and should be covered by Regulation (EU) 2016/1011 only if they are significant or critical benchmarks and have not been exempted from the scope of this Regulation. Commodity benchmarks subject to the specific regime in Annex II of Regulation (EU) 2016/1011 should always be covered by that Regulation in order to ensure the robustness and reliability of their assessments.

Added:(13) To ensure the timely start of the supervision of significant benchmarks, administrators of benchmarks that have become significant either by reaching the applicable quantitative threshold or by designation, should be required to seek, within 60 working days, authorisation or registration or, in the case of benchmarks provided by an administrator located in a third-country, endorsement or recognition.

Added:(14) To mitigate the risks linked to the use of benchmarks that are potentially not safe for use in the Union, and to warn potential users, competent authorities and ESMA should be able to issue a warning under the form of a public notice that the administrator of a significant benchmark does not comply with the applicable requirements, in particular as regards the compliance with the obligation for the benchmark administrator to be authorised, registered, endorsed or recognised, as applicable. Once such a warning has been issued, supervised entities should no longer be able to add new references to such benchmarks or combination of benchmarks. Similarly, to prevent the risks entailed by the use of benchmarks that claim compliance with the EU Climate Transition and EU Paris-aligned labels without being subject to adequate supervision, supervised entities should neither be able to add new references to an EU Climate Transition Benchmark or an EU Paris-aligned Benchmark or combination of such benchmarks in the Union where the administrator of those benchmarks is not included in ESMA’s register of administrators and benchmarks.

Added:(15) To avoid potentially excessive market disruptions following the prohibition of the use of a benchmark, competent authorities or ESMA should be able to allow the temporary continued use of such a benchmark. To ensure a sufficient level of transparency and protection vis-à-vis end-investors, users of those benchmarks that are subject to a warning under the form of a public notice should identify a suitable alternative to replace those benchmarks within 6 months following the publication of that public notice, or otherwise ensure that clients are appropriately informed of the lack of an alternative benchmark.

Added:(16) Under Article 32 of Regulation (EU) 2016/1011, recognition of benchmark administrators located in a third country serves as a temporary means of access to the Union market pending the adoption of an equivalence decision by the Commission. However, given the very limited number of third-country benchmarks covered by equivalence decisions, such recognition should become a permanent means of access to the Union market for such benchmark administrators.

Added:(17) Benchmarks covered by an equivalence decision are considered to be equivalently regulated and supervised to Union benchmarks. The obligation to seek endorsement or recognition should therefore not apply to administrators of significant benchmarks located in a third country that benefit from an equivalence decision.

Added:(18) In the interest of transparency and to ensure legal certainty, competent authorities that designate a benchmark as significant should specify the potential use restrictions that arise where the administrator of such a benchmark fails to be authorised or registered or fails to comply with the endorsement or recognition requirements, as applicable.

Added:(19) To mitigate the risks linked to the use of inadequately supervised significant benchmarks, where the administrator of a benchmark that becomes significant does not seek authorisation, registration, recognition or endorsement within the prescribed time limit, or where the authorisation, registration, recognition or endorsement for such benchmark administrator fails, or where an administrator is withdrawn its authorisation, registration, endorsement or recognition, the competent authority or ESMA, as applicable, should issue a public notice stating that the significant benchmarks provided by that administrator are not suitable for use in the Union.

Added:(20) Benchmark users rely on transparency regarding the regulatory status of benchmarks they use or intend to use. For that reason, ESMA should list in the register of administrators and benchmarks those benchmarks that are subject to the most detailed requirements laid down in Regulation (EU) 2016/1011, either because their use in the Union is above the set threshold for significant benchmarks, because they are designated as significant by a national supervisor or by ESMA, or because they are critical benchmarks. For the same reason, ESMA should also list in that register EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks provided by administrators that are authorised or registered. Finally, ESMA should also list in the register the benchmarks for which a competent authority or ESMA has issued a public notice prohibiting the further use of that benchmark. To further reduce the burden on users, all such information should also be made readily available on the European Single Access Point (ESAP).

Added:(20a) Two categories of ESG-related benchmarks are subject to compliance with minimum standards set out by Union law, namely EU Climate Transition Benchmarks (EU-CTB) and EU Paris-aligned Benchmarks (EU-PAB). Regulation (EU) 2019/2089 has introduced rules as regards the transparency of benchmarks claiming, in their legal or marketing documentation, to be taking environmental, social or governance (ESG) factors into consideration in their design. In order to maintain a high level of transparency surrounding ESG-related claims and an adequate level of protection for users, it is appropriate to require users not to use benchmarks making ESG-related claims where such benchmarks do not provided users with the information referred to in Articles 13(1), point (d), and 27(2a) of Regulation (EU) 2016/1011. This should apply to the use of any benchmark claiming to take ESG factors into account in their design, regardless of whether such benchmarks are administered in the Union or in a third-country.

Added:However, other categories of benchmarks making ESG-related claims, not considered EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks, could contribute, or alternatively pose risks, to the promotion of key Union policies on sustainable finance and the achievement of related objectives or the implementation of the European Green Deal.

Added:Therefore, it is appropriate that by 31 December 2028 the Commission presents a report, on the basis of input from ESMA, assessing the availability of ESG benchmarks in European and global markets and their market up-take, analysing whether they would be considered significant benchmarks, and studying the costs and effects on market availability and the evolving nature of the sustainable indicators and the methods used to measure them. Furthermore, it should assess the need to regulate benchmarks making ESG-related claims, with the aim to maintain an adequate level of protection of users of those benchmarks as well as a high level of transparency, reduce the risk of greenwashing and ensure coherence with other EU legislation on sustainable disclosure requirements. That report should be accompanied by an impact assessment and, where appropriate, a legislative proposal.

Added:(21) To ensure a seamless transition to the application of the rules introduced under this Regulation ▌administrators previously supervised under Regulation (EU) 2019/2089 should keep existing registrations, authorisations, recognitions or endorsements for nine months after the entry into application of this amending Regulation. That period is intendedto give competent authorities and ESMAsufficient time to decide whether any of the previously supervised administrators should be designated in accordance with this amending Regulation. If designated, administrators previously authorised, registered, endorsed or recognised or administrators who voluntarily opt-in to this Regulation, should be allowed to retain their previous status without the need to re-apply. Administrators of significant benchmarks should, in any case, be allowed to retain their status as authorised, registered, endorsed or recognised benchmark administrators.

Added:(22) In order to give competent authorities and ESMA the necessary time to gather information on potential significant benchmarks and to adapt existing infrastructure to the new framework proposed under this amending Regulation, the date of application of this Regulation should be deferred.

Added:(23) Regulation (EU) 2016/1011 should therefore be amended accordingly,

Added:HAVE ADOPTED THIS REGULATION:

Added:Amendments to Regulation (EU) 2016/1011

Added:Regulation (EU) 2016/1011 is amended as follows:

Added:(1) Article 2 is amended as follows:

Added:(a) the following paragraph is inserted:

Added:‘1a. Titles II, III, with the exception of Articles 23a to 23c, IV and VI .apply only in respect of critical benchmarks, significant benchmarks, EU Climate Transition, Benchmarks and EU Paris-aligned Benchmarks. Article 10 in Title II and Titles III, IV and VI apply to commodity benchmarks subject to Annex II’;

Added:(b) in paragraph 2, point (g) (i) is deleted;

Added:(2) in Article 3, paragraph 1 is amended as follows:

Added:(-a) in point (17), point (m) is replaced by the following:

Added:‘(m) an administrator authorised or registered pursuant to Article 34’;

Added:(a) point (22a) is deleted;

Added:(b) point (27) is deleted;