ESMA tightens benchmark rules

Final benchmark regulatory text has been submitted to the European Commission for approval within three months.

The European Securities and Markets Authority (ESMA) has tightened rules around financial benchmarks to improve transparency and reduce manipulation. 

In a final regulatory report, ESMA outlined the behaviours and standards expected of administrators and contributors of benchmarks.

The rules will see the process of the provision of benchmarks checked through a new oversight function administrators are expected to implement.

Administrators must be authorised and registered across member states and conflicts of interest should be properly managed, ESMA said.

Potential for manipulation will also be minimised though new rules regarding the methodology of calculation and contribution of input data.

Steven Maijoor, ESMA Chair, explained the regulation ensures the accuracy, robustness and integrity of benchmarks.

“These requirements will ensure that benchmarks are produced in a transparent and reliable manner and so contribute to well-functioning and stable markets, and investor protection,” he said.

The final regulatory report has been submitted to the European Commission for approval which is expected within three months.