UK benchmark operators have been given approval to operate in the EU after an agreement was reached between the UK’s Financial Conduct Authority (FCA) and the European Securities and Markets Authority (Esma).
The two regulators have signed a memorandum of understanding (MOU) over the issue, which will also allow information exchange to take place between the two authorities and could mean potential suspension or withdrawal of benchmark administrators.
Under current regulations, a non-EU benchmark administrator has to apply for recognition with Esma before operating in the EU and this means Esma has to establish an MOU with a firm’s home regulator.
With the UK exiting the EU and becoming a third country in 2020, it has had to re-establish this relationship. The UK government announced equivalence between UK and EU benchmark regulations in 2020 and this involved the extension of benchmark regulation past the end of the Brexit transition period and to 2025.
Benchmarks and how they are regulated have been an area of greater focus by Esma in recent times. In July 2022, the authority launched a consultation as part of plans to introduce new requirements for third-country benchmark administrators.
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