110 Amendments of Sharon BOWLES related to 2013/0314(COD)

Proposal for a regulation
Recital 26

(26) The integrity and accuracy of benchmarks depends on the integrity and accuracy of the input data provided by contributors. It is essential that the ~~obligations of the contributors in respect of this input data are clearly specified,~~contributors can be relied on and are consistent with the benchmark administrator's controls and methodology. ~~It is therefore necessary that the b~~Benchmark administrators should therefore produces a code of conduct to specify these requirements and that ~~the contributors are bound by that code of conduct~~as far as is practicable, bearing in mind not all contributors are within the Union but may be needed for an accurate benchmark, the contributors are required to sign a binding code of conduct. Where a signature cannot be obtained, the continued provision of data from a contributor after communication of the code of conduct to them by the administrator shall constitute evidence of a legally binding agreement between the parties involved.

2013/12/18
Committee: ITRE

Proposal for a regulation
Recital 37 a (new)

(37a) In the cases where this Regulation captures or potentially captures supervised entities and markets covered by Regulation 1227/2011/EU of the European Parliament and of the Council on wholesale energy market integrity and transparency (REMIT), the Agency for the Cooperation of Energy Regulators (ACER) should be consulted by ESMA (European Securities and Markets Authority) in order to draw on ACER's expertise in energy markets and to mitigate duel-regulation.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 5 – paragraph 1

~~The following governance requirements shall apply to the administrator:~~ Administrators of the following qualifying benchmark categories shall be subject to the requirements of this regulation: a) administrators of critical benchmarks; b) administrators of broadly used commodity benchmarks, as defined and updated by ESMA after close consultation with ACER; c) administrators of major benchmarks; d) administrators of exclusively licensed benchmarks as defined and updated by ESMA; e) administrators of an IBOR, Overnight Index Swap, Overnight Index Rates or other benchmark that the competent authority deems a substitute or comparable to those benchmarks and which are widely used; f) administrators of a benchmark with relatively few submitters and which the competent authority considers vulnerable to manipulation; g) benchmarks that the competent authority has investigated and concluded by way of a reasoned decision requires supervision due to its vulnerability; h) substantial numbers of benchmarks which the competent authority or ESMA considers collectively have significant single market impact; (i) administrators of benchmarks used as the standard measure of the performance of the relevant assets or class or group of assets which is not produced by an arm's length third party administrator where the competent authority deems it to have high levels of conflicts of interest. ESMA shall provide guidelines for competent authorities concerning application of the criteria in (b), to (i) and shall provide regulatory technical standards for circumstances when requirements in (a) to (i) can be phased, waived or any provisions of this Regulation dis-applied for reasons of proportionality or duplication of supervisory requirements or existing governance controls. This shall also include lists of exempted types of institutions which shall include identification of the corresponding governance controls... In establishing guidelines and regulatory technical standards, ESMA shall take into account: (i) the exemptions normally provided to Members of the European System of Central Banks (ESCB), Central banks of third countries, National statistic authorities of member states and National statistical authorities of third countries; (ii) whether to exempt, wholly or partly, regulated markets, or, after close consultation with ACER, any entities regulated under REMIT; (iii) whether the provisions as specified in Annex III should be the only part of this Regulation applied to price reporting agencies; (iv) where there should be proportionality of application, including a phasing-in of the application of the Regulation; (v) how the regulatory framework interacts with third counties and international trade.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 6 – paragraph 2

2. Where outsourcing takes place, an administrator shall ensure that the outsourcing requirements set out in Section B of Annex 1 or Annex III as applicable are satisfied.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 7 – paragraph 2

2. An administrator shall comply with the requirements concerning input data and methodology set out in Section C of Annex I or Annex III as applicable.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 8 – paragraph 1

1. The administrators of benchmarks under Article 5 shall ensure that there are adequate systems and effective controls designed to ensure the integrity of the input data for the purpose of paragraph 2.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 9 – paragraph 2

2. The code of conduct shall be signed by the administrator and the contributors and ~~shall be legally binding on all parties to it~~insofar as practicable with regard to the nature and location of the contributor shall be legally binding on all parties to it. Where a signature cannot be obtained, the continued provision of data from a contributor after communication of the code of conduct to them by the administrator shall constitute evidence of a legally binding agreement between the parties involved.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 9 – paragraph 3 – subparagraph 2

The Commission shall take into account the different characteristics of benchmarks and contributors, notably in terms of differences in input data and methodologies, whether the contributors are voluntary, the risks of input data being manipulated and international convergence of supervisory practices in relation to benchmarks. and the proportionality of this Regulation. ESMA shall provide guidelines, after close consultation with ACER, with regard to applicability of legally binding codes of conduct in particular with regard to non-regulated entities and price reporting agencies within the EU.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 20 – paragraph 1 – introductory part

1. Benchmarks provided by an administrator established in a third country may be used by supervised entities in the Union ~~provided that the following conditions are complied with:~~ unless they would have fallen by analogy into the qualifying benchmark category in Article 5.1. Benchmarks that would fall by analogy in the qualifying benchmark categories may be used provided that the legal framework, supervisory practice, or rules of the producer or administrator of the benchmark in that third country follow IOSCO principles for financial benchmarks or any subsequently agreed international standards for benchmarks; the supervised entity shall notify its competent authority and ESMA of the actual or prospective benchmarks that it uses and the basis on which it relies to demonstrate compliance with IOSCO or international standards for benchmarks. Administrators of third country benchmarks may submit demonstration of compliance with IOSCO principles directly to ESMA, which may then be referenced by supervised entities ESMA shall maintain a register of third countries and benchmark providers that it considers can be relied upon as a basis for compliance with international standards without further evidence. ESMA shall update this list using its own information and in consideration of evidence submitted by supervised entities or received from third country administrators, national competent authorities or ACER. In the event of dispute between competent authorities of Member States concerning the use of a third country benchmark by a supervised entity that has extensive cross border use, ESMA may conduct binding mediation. Six months before the entry into force of this regulation ESMA shall produce a report on the implementation of IOSCO principles. The procedure under this paragraph shall be reviewed after five years in the light of international regulatory convergence and in particular whether to extend the duration of its application.

2013/12/18
Committee: ITRE

Proposal for a regulation
Article 39 – paragraph 4

4. The use of a benchmark shall be permitted by the relevant competent authority of the Member State where the administrator is located until ~~such time as the benchmark references~~the termination of the financial instruments and financial contracts ~~worth no more than 5% by value of the~~that referenced this benchmark at the time of entry into force of this Regulation. No new financial instruments ~~and~~or financial contracts tshatll reference~~d this~~ such an existing benchmark atfter the ~~time of entry into force of this Regulation. No financial instruments or financial contracts shall reference such an existing benchmark after the entry into application of this Regulation.~~ entry into application of this Regulation. ESMA shall develop draft regulatory technical standards, after close consultation with ACER in the case of point (c), to specify: a) information to be provided by an administrator in the application for authorisation in order to reasonably demonstrate that frustration, force majeure or breach of a contract could happen; b) the circumstances in which frustration, force majeure and breach of the terms of any financial contract are regarded to occur in accordance with this Regulation; c) calibrated and proportional transitional procedures for critical and sectoral benchmarks in particular for interest- rates and commodities. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010 and subject to a third month extension [as provided for in Omnibus 2]

2013/12/18
Committee: ITRE

Proposal for a regulation
Recital 8 a (new)

(8 a) The application of the criteria for qualifying categories of benchmark administrators falling within the scope of this Regulation should be based on guidelines and draft regulatory technical standards developed by ESMA. In providing for these guidelines and technical standards, ESMA should take into account the circumstances where the application of the qualifying categories can be implemented through a phased-in approach and whether the application of parts or all of the provisions of this Regulation should be waived or delayed due to the nature of the benchmarks concerned or international developments.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 8 b (new)

(8 b) Administrators of critical or major benchmarks may also be administrators of other benchmarks that of themselves would not have drawn the administrator into regulation. However, such administrators will have a reputation and it is therefore appropriate for their governance procedures to cover all these further benchmarks, with some adjustment for proportionality and the risks posed by the benchmark-setting process. For example benchmarks based on straightforward publicly available transactional information from regulated markets are less at risk than those with subjective inputs.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 8 c (new)

(8 c) ESMA will be mandated to establish criteria specifying the implementation and application of the Regulation in terms of governance, input data and methodology, and code of conduct. This should be calibrated according to the nature and extent of the risks posed by each benchmark, the source of the underlying data inputs and the particular benchmark-setting process.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 9 a (new)

(9 a) Physical commodities markets present unique characteristics which must be taken into account in order to avoid undermining the integrity of commodity benchmarks and negatively impacting commodity market transparency, European security of supply, competitiveness and the interests of consumers. Accordingly, certain articles in this Regulation are not appropriate to apply to commodity benchmarks. Annex III of this Regulation, which closely reflects principles developed for commodities benchmarks by IOSCO in collaboration with the International Energy Agency and the International Energy Forum among others, is specifically designed to apply to all commodity benchmarks which fall within the scope of this Regulation and sets out which of the requirements in the Regulation will not apply to commodity benchmarks.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 17

(17) Vulnerabilities in the process of providing a benchmark that are not subject to adequate governance create the possibility to manipulate a benchmark. Where benchmarks are available to the public the full extent of these risks may not be taken into account and so insufficient controls and governance may be implemented. In order to ensure the integrity of benchmarks, benchmark administrators should be required to implement adequate governance arrangements to control ~~these~~ conflicts of interest and to safeguard confidence in the integrity of benchmarks. Even where effectively managed, most administrators are subject to some conflicts of interest and may have to make judgements and decisions which affect a diverse group of stakeholders. It is therefore necessary that administrators have an independent function to oversee the implementation and effectiveness of the governance arrangements that provide effective oversight. The oversight function should be carried out either by a separate committee, or other appropriate governance arrangements. Oversight functions should always be proportionate to the benchmark in question.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 23

(23) Any discretion that can be exercised in providing input data creates an opportunity to manipulate a benchmark. Where the input data is transaction based data, there is less discretion and therefore the opportunity to manipulate the data is reduced. As a general rule benchmark administrators should therefore use actual transaction input data where possible but other data may be used in those cases where the transaction data is insufficient to ensure the integrity and accuracy of the benchmark. In cases where transaction data is not sufficiently available, the administrator should retain flexibility to use the inputs it believes are appropriate under its methodology to ensure the quality and integrity of the benchmark.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 26

(26) The integrity and accuracy of benchmarks depends on the integrity and accuracy of the input data provided by contributors. It is essential that the ~~obligations of the contributors in respect of this input data are clearly specified,~~contributors can be relied on and are consistent with the benchmark administrator's controls and methodology. It is therefore necessary that the benchmark administrator produces a code of conduct to specify these requirements and that ~~the contributors are bound by that code of conduct.~~ as far as is practicable, bearing in mind not all contributors are within the EU but may be needed for an accurate benchmark, the contributors are bound by that code of conduct. Where it becomes evident that a contributor does not comply with the code of conduct administrators should take remedial action which may include, but not be limited to, refusing submissions from that contributor.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 31 a (new)

(31 a) More generally, supervised entities have a particular responsibility to support transparency and integrity of the markets in which they are active. Therefore competent authorities should ensure that supervised entities use benchmarks responsibly and contribute where they are participants in the underlying market.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 34

(34) This Regulation should take into account the Principles for financial benchmarks issued by the International Organization of Securities Commissions (IOSCO) (hereinafter referred to as ‘'IOSCO Principles’') on the 17 July 2013 which serve as a global standard for regulatory requirements for benchmarks. It is necessary for investor protection that an assessment that the supervisions and regulation ~~in any third country are equivalent to Union supervision and regulation of benchmarks takes place before any benchmark provided from that third country can be used in the Un~~, which may include reliance on administrator rules, in any third country follows IOSCO standards. Given that many third country benchmarks are in use for international trade involving EU corporates and institutions, it is important that such international trade is not disrupted by premature or inappropriate application of regulation.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 34 a (new)

(34 a) In considering whether third country benchmarks can be relied upon as compliant with international standards, ESMA shall take into account any published independent assurance review of an administrator’s adherence to the relevant IOSCO principles, where such an assurance review is required by IOSCO.

2013/12/19
Committee: ECON

Proposal for a regulation
Recital 37 a (new)

(37 a) In the cases where this Regulation captures or potentially captures supervised entities and markets covered by Regulation 1227/2011 on wholesale energy market integrity and transparency (REMIT), the Agency for the Cooperation of Energy Regulators (ACER) should be fully consulted by ESMA in order to draw on ACER's expertise in energy markets and to mitigate dual-regulation.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 1 – paragraph 1

This Regulation introduces a common framework to en~~sur~~hance the accuracy and integrity of ind~~ices used as benchmarks~~ex and benchmarking activity the output of which is used in financial instruments and financial contracts in the Union. The Regulation thereby contributes to the proper functioning of the internal market while achieving a high level of consumer and investor protection.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 2

(2) ‘'benchmark’' means any tradable or broadly used commercial index by reference to which the amount payable under a financial instrument or a financial contract, or the value of a financial instrument or the price at which it is sold, traded or redeemed is determined or an index that is used toas the standard measure of the performance of ~~an investment fund~~the relevant assets or class or group of assets. The administrator of the index has clearly indicated is suitable for such purposes in its benchmark statement made under Article 15; For the purposes of this Regulation, the following should not be considered as a 'benchmark': (i) reference prices or settlement prices produced by Central Counterparties (CCPs) as defined in Article 3(1)(14)(g) of this Regulation, provided that they are produced solely for the purposes of risk management and settlement. (ii) prices of single financial instruments, as defined in Article 3(1)(13);

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 5

(5) ‘'user of a benchmark’' means any ~~person who issues or owns a financial instrument or~~natural or legal person, other than consumers, who is a client or licensee of the benchmark administrator for the relevant benchmark and who issues or owns a financial instrument or who is a client or licensee of the benchmark administrator for the relevant benchmark and who is party to a financial contract which references athe relevant benchmark;

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 7

(7) ‘'contributor’' means a natural or legal person contributing input data excluding input data sourced from 'regulated data' as defined in Article 3(1), point (11), of this Regulation;

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 8

(8) ‘'supervised contributor’' means a supervised entity in the union that contributes input data to an administrator located in the Union;

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 11

(11) ‘'regulated data’' means input data that is contributed directly from a trading venue as defined in point (25) of paragraph 1 of Article 2 of [MIFIR] or approved publication arrangement as defined in point (18) of paragraph 1 of Article 2 of [MIFIR ] or an approved reporting arrangementrepresenting executed trades or firm quotes or transactional data contributed directly from a trading venue as defined in point (205) of paragraph 1 of Article 2 of [MIFIR] ~~in acc~~ord an~~ce with mandatory post trade data requirements~~y regulated exchange outside the Union or an electricity exchange as referred to in point (j) of paragraph 1 of Article 37 of Directive 2009/72/EC19 or a natural gas exchange as referred to in point (j) of paragraph 1 of Article 41 of Directive 2009/73/EC20 or an auction platform referred to in Article 26 or in Article 30 of Regulation (EU) No 1031/2010 of the European Parliament and of the Council; __________________ 19 OJ L 211, 14.8.2009, p. 55. 20 OJ L 9, 14.8.2009, p. 112.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 11 a (new)

(11 a) 'Reported data' means input data that is contributed directly from an approved publication arrangement as defined in point (18) of paragraph 1 of Article 2 of [MIFIR ] or an approved reporting arrangement as defined in point (20) of paragraph 1 of Article 2 of [MIFIR] in accordance with mandatory post trade data requirements;

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 12

(12) ‘'transaction data’' means observable prices (including binding quotes), rates, indices or values representing transactions between unaffiliated counterparties in an active market subject to ~~competitive~~ supply and demand forces;

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 21

(21) ‘'critical benchmark’' means a benchmark,: (a) to which the majority of contributors ~~to which~~ are supervised entities ~~and that reference financial instruments having a notional value of at least 500 billion euro;~~; (b) that does not include benchmarks compiled from regulated data as defined in Article 3(1) (11) of this Regulation; and (c) that reference financial instruments admitted to trading or traded on at least one EU trading venue as defined in point (25) of paragraph 1 of Article 2 of [MIFIR] or other financial asset as defined in IAS 32 having a notional cumulative amount of at least 500 billion euro on such EU venues or, when such determination is not straightforward, is otherwise deemed by ESMA to have wide use on international markets and for which there is no reasonable substitute so that cessation of the benchmark would have a significant adverse impact on financial stability, the orderly functioning of the markets, consumers or the real economy.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 21 a (new)

(21 a) 'major benchmark' means a benchmark that references financial instruments admitted to trading or traded on an EU trading venue as defined in point (25) of paragraph 1 of Article 2 of [MIFIR] or other financial asset as defined in IAS 32, excluding physical and physically delivered commodities, having a large impact on consumers or the potential to threaten market integrity;

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 21 b (new)

(21 b) 'an index series' is a set of indices derived from the same data and calculated using the same methodology, in which the indices differ only according to one or more of: b) their constituent eligibility criteria determined by screening for country/industry/size/liquidity/ESG; c) the currency in which they are calculated; d) the incorporation of any currency hedge; e) adjustments made for the taxation of distributions and capital gains.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 1 – point 22 a (new)

(22 a) 'expert judgement' means the exercise of discretion by an Administrator or Submitter with respect to the use of data in determining a Benchmark. Expert Judgment includes extrapolating values from prior or related transactions, adjusting values for factors that might influence the quality of data such as market events or impairment of a buyer or seller's credit quality, or weighting firm bids or offers greater than a particular concluded transaction.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 2 – subparagraph 1 a (new)

The Commission shall also be empowered to adopt delegated acts in accordance with Article 37 to determine the calibrated application of the regulation in relation to: (i) the types and sources of data used in the calculation and determination of the benchmark; (ii) the benchmark methodology; (iii) the potential risks posed by the benchmark to market integrity and its vulnerability to manipulation; and (iv) whether the benchmark is a critical benchmark.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 3 – paragraph 2 a (new)

2 a. ESMA shall develop draft regulatory technical standards to determine: (a) the definition of trading venue to include any other relevant quoting or trading platforms, and instances where regulated data may include Net Asset Value or data from public filings under the accounting directives and any appropriate corresponding exemption under Art 7.1b. (b) and as required to update the criteria for major benchmarks, taking into account the impact on consumers and the potential threat to market integrity based on: (i) the number and variety of users of the benchmark and any dependent sub- benchmark; (ii) the volume and variety of financial contracts that reference the benchmark and any dependent sub-benchmark; (iii) the volume of financial contracts referenced or admitted to trading or traded on an EU venue as defined in point (25) of paragraph 1 of Article 2 of [MiFIR] both in absolute number and relative to the volume of transactions in the underlying interest measured by the benchmark; (iv) whether to include other financial assets as defined in IAS 32 or to adjust the thresholds in paragraph (21) and (22).

2013/12/19
Committee: ECON

Proposal for a regulation
Article 5 – paragraph 1 – subparagraph 1 – introductory part

~~The following governance requirements shall apply to the administrator:~~ Administrators of the following qualifying benchmark categories shall be subject to the requirements of this regulation: a) administrators of critical benchmarks; b) administrators of broadly used commodity benchmarks, as defined and updated by ESMA after close consultation with ACER; c) administrators of major benchmarks; d) administrators of exclusively licensed benchmarks as defined and updated by ESMA; e) administrators of an IBOR, Overnight Index Swap, Overnight Index Rates or other benchmark that the competent authority deems a substitute or comparable to those benchmarks and which are widely used; f) administrators of a benchmark with relatively few submitters and which the competent authority considers vulnerable to manipulation; g) benchmarks that the competent authority has investigated and concluded by way of a reasoned decision requires supervision due to its vulnerability; h) substantial numbers of benchmarks which the competent authority or ESMA considers collectively have significant single market impact; (i) administrators of benchmarks used as the standard measure of the performance of the relevant assets or class or group of assets which is not produced by an arm's length third party administrator where the competent authority deems it to have high levels of conflicts of interest. ESMA shall provide guidelines for competent authorities concerning application of the criteria in (b), to (i) and shall provide regulatory technical standards for circumstances when requirements in (a) to (i) can be phased, waived or any provisions of this Regulation dis-applied for reasons of proportionality or duplication of supervisory requirements or existing governance controls. This shall also include lists of exempted types of institutions which shall include identification of the corresponding governance controls. In establishing guidelines and regulatory technical standards, ESMA shall take into account: (i) the exemptions normally provided to Members of the European System of Central Banks (ESCB), Central banks of third countries, National statistic authorities of member states and National statistical authorities of third countries; (ii) whether to exempt, wholly or partly, regulated markets, or, after close consultation with ACER, any entities regulated under REMIT; (iii) whether the provisions as specified in Annex III should be the only part of this Regulation applied to price reporting agencies; (iv) where there should be proportionality of application, including a phasing-in of the application of the Regulation; (v) how the regulatory framework interacts with third counties and international trade.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 6 – paragraph 2

2. Where outsourcing takes place, an administrator shall ensure that the outsourcing requirements set out in Section B of Annex 1 ~~are satisfied~~or Annex III as applicable are satisfied. These requirements shall not apply in relation to a service provider from whom an administrator sources data if this service provider is a regulated market as defined in point (5) of paragraph 1 of Article 2 of [MiFIR].

2013/12/19
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 1 – subparagraph 1 – point a – paragraph 1

The input data shall be transaction data. If available transaction data is not sufficient to represent accurately and reliably the market or economic reality that the benchmark is intended to measure, input data which is not transaction data may be used provided that such data is verifiable or if expert judgement, as defined in Article 3 (1), point 21b (new) is considered by the administrator to be necessary. In the case of interest rate benchmarks this must be in line with Annex II paragraph 5 or publicly sourced from regulatory filings.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 1 – subparagraph 1 – point c

(c) Where the input data of a benchmark is not transaction data and a contributor is a party to more than 50% of value of transactions in the market which that the benchmark intends to measure, the administrator shall verify that the input data represents a market subject to ~~competitive~~ supply and demand forces. Where the administrator finds that the input data does not represent a market subject to competitive supply and demand forces, it shall either change ~~the input data,~~ the contributors or the methodology to ensure that the input data represents a market subject to ~~competitive~~ supply and demand forces, or cease to provide that benchmark (‘'Market impact’').

2013/12/19
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 1 – subparagraph 1 – point e

(e) The administrator shall develop, operate and administer the benchmark data and methodology transparently (‘and, in accordance with Articles 15 and 16 ('Transparency’').

2013/12/19
Committee: ECON

Proposal for a regulation
Article 7 – paragraph 2

2. An administrator shall comply with the requirements concerning input data and methodology set out in Section C of Annex I or Annex III as applicable.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 1

1. The administrators of benchmarks under Article 5 shall ensure that there are adequate systems and effective controls designed to ensure the integrity of the input data for the purpose of paragraph 2.

2013/12/19
Committee: ECON

Olle SCHMIDT, Sharon BOWLES

Proposal for a regulation
Article 8 – paragraph 2 – point b

(b) conduct that ~~may~~appears to involve manipulation or attempted manipulation of a benchmark; or

2013/12/19
Committee: ECON

Proposal for a regulation
Article 8 – paragraph 3 a (new)

3 a. In accordance with Article 29(1) of the [Market Abuse Regulation], employees can report actual or potential breaches of this Regulation through a mechanism of the national competent authorities.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 1

1. The administrator shall adopt a general code of conduct ~~for each benchmark~~, adjusted as appropriate for benchmarks in the qualifying benchmark categories in Article 5(1) clearly specifying the administrator's and contributors' responsibilities and obligations with respect to the provision of the benchmark which shall include a clear description of the input data to be provided, and, for non-commodity benchmarks, at least the elements set out in Section D of Annex I and for commodity benchmarks as provided for in Annex III.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 2

2. The code of conduct shall be signed by the administrator and by the contributors ~~and shall be legally binding on all parties to it.~~ insofar as is practicable with regard to the nature and location of the contributor. The administrator shall be responsible for ensuring that each contributor is properly aware of the terms of the code of conduct and will take appropriate action, including but not limited to removal of a contributor, when it is evident that the contributor does not comply.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 2 a (new)

2 a. The code of conduct shall be legally binding when relating to critical benchmarks.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 9 – paragraph 3 – subparagraph 2

The Commission shall take into account the different characteristics of benchmarks and contributors, notably in terms of differences in input data and methodologies, whether the contributors are voluntary, the risks of input data being manipulated and international convergence of supervisory practices in relation to benchmarks and the proportionality of this Regulation. ESMA shall provide guidelines, after close consultation with ACER, with regard to applicability of legally binding codes of conduct in particular with regard to non-regulated entities and price reporting agencies within the EU.

2013/12/19
Committee: ECON

Proposal for a regulation
Article 11 – paragraph 1 – point a

(a) The supervised contributor shall ensure that the provision of input data is not affected by any existing or potential conflict of interest and that, where any discretion is required, it is independently and honestly exercised based on relevant information in accordance with the relevant code of conduct (‘'Conflicts of interest’').

2013/12/19
Committee: ECON

Proposal for a regulation
Article 11 – paragraph 1 – point b

(b) The supervised contributor shall have a control framework that ensures the integrity, accuracy and reliability of the input data and that the input data is provided in accordance with the provisions of this Regulation and the relevant code of conduct (‘'Adequate controls’').

2013/12/19
Committee: ECON

Proposal for a regulation
Title 3

SECTORAL REQUIREMENTS AND CRITICAL AND MAJOR BENCHMARKS

2013/12/20
Committee: ECON

Proposal for a regulation
Article 12 – paragraph 3 – introductory part

3. The Commission shall be empowered to adopt delegated acts in accordance with Article 397 to specify, or adjust, in light of market and technological developments and international developments as well as after consulting ESMA, the following elements of Annexes II and III:

2013/12/20
Committee: ECON

Proposal for a regulation
Article 12 – paragraph 3 – point a

(a) The period of time after which input data shall be published (Annex II point 6) which shall take into account reasonable licensing terms and legitimate intellectual property rights

2013/12/20
Committee: ECON

Proposal for a regulation
Title 3 – chapter 2 – title

Critical and Major benchmarks

2013/12/20
Committee: ECON

Proposal for a regulation
Article 13 – paragraph 1 a (new)

1a. The Commission shall adopt a list of benchmarks located within the Union which are major benchmarks, in accordance with the definition laid down in Article 3(21). Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 38(2).

2013/12/20
Committee: ECON

Proposal for a regulation
Article 14 – paragraph 4 – point a – point 2

(2) ~~a wr~~the competent authority judges that an acceptable substitute benchmark is available and users of the critical benchmark can switch to this substitute~~n report by t~~ without significant disruption to the market, at minimal costs. The administrator tos shall assist the competent authority ~~providing evidence for its assessment that the critical benchmark’s continued vi~~in detailing the means of transition to a substitute benchmark and the ability can ~~be assured once mandatory participation ha~~d costs to users of transferring to this been ~~revoked~~chmark.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 15 – paragraph 1 – point a

(a) clearly and unambiguously defines the market or economic reality measured by the benchmark and the circumstances envisaged in which such measurement may become unreliable;

2013/12/20
Committee: ECON

Proposal for a regulation
Article 15 – paragraph 1 – point b

(b) describes or lists the categories of purposes for which it is appropriate to use the benchmark ~~and~~, such as research, performance benchmarking or financial products and, when relevant, the circumstances envisaged in which it may cease to be fit for such purposes;

2013/12/20
Committee: ECON

Proposal for a regulation
Article 15 – paragraph 1 – point e a (new)

(ea) Where it is an index as provided for in Article 5, point (i), the procedures to ensure objectivity and full disclosure of the administrators’ interests.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 16 – paragraph 1

1. An administrator shall publish the input data or the methodology used to determine the benchmark ~~immediately after publication of the benchmark~~at appropriate intervals except where publication would have serious adverse consequences for the contributors or adversely affect the reliability or integrity of the benchmark. ~~In such cases publication may be delayed for a period that significantly diminishes these consequences. Any personal data included in input data shall not be published~~. Any personal data included in input data shall not be published without consent. All input data and methodology, used to determine the benchmark, for critical and major benchmarks and benchmarks used for substantial retail investment shall be published in the public interest and shall include a concise explanation of the extent to which, and the basis upon which expert judgement, if any, was used. Licenses shall be made available on fair, reasonable and non-discriminatory terms and administrators who issue financial products shall publish their pricing and royalty policy in sufficient detail to show no undue cross subsidy on revenue generation. Upon the request of a Competent Authority or ESMA, administrators shall provide the Competent Authority or ESMA with the input data, methodology and judgmental decisions made in relation to a benchmark. This requirement may be exercised as a general requirement or for a specific period or purpose.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 18 – paragraph 1

1. Where a supervised entity intends to enter into a financial contract with a consumer, and in accordance with the provisions of MiFID regarding suitability of investments, that supervised entity shall first obtain the necessary information regarding the consumer’s knowledge and experience with respect to the benchmark, his financial situation and his objectives in respect of that financial contract, and the benchmark statement published in accordance with Article 15 and shall assess whether referencing the financial contract to that benchmark is suitable for him.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 19 – paragraph 1

A supervised entity may use a ~~benchmark~~n index in the Union as a reference in a financial instrument or financial contract or to measure the performance of an investment fund if it is provided by an administrator ~~author~~recognised in accordance with Article 23 and the administrator has indicated that the index or the index series to which it belongs is suitable for use as a benchmark in its benchmark statement made under Article 15 or an administrator located in a third country that is registered in accordance with Article 21.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 20 – paragraph 1 – introductory part

1. Benchmarks provided by an administrator established in a third country may be used by supervised entities in the Union ~~provided that the following conditions are complied with:~~ unless they would have fallen by analogy into the qualifying benchmark category in Article 5.1. Benchmarks that would fall by analogy in the qualifying benchmark categories may be used provided that the legal framework, supervisory practice, or rules of the producer or administrator of the benchmark in that third country follow IOSCO principles for financial benchmarks or any subsequently agreed international standards for benchmarks; the supervised entity shall notify its competent authority and ESMA of the actual or prospective benchmarks that it uses and the basis on which it relies to demonstrate compliance with IOSCO or international standards for benchmarks. Administrators of third country benchmarks may submit demonstration of compliance with IOSCO principles directly to ESMA, which may then be referenced by supervised entities ESMA shall maintain a register of third countries and benchmark providers that it considers can be relied upon as a basis for compliance with international standards without further evidence. ESMA shall update this list using its own information and in consideration of evidence submitted by supervised entities or received from third country administrators, national competent authorities or ACER. In the event of dispute between competent authorities of Member States concerning the use of a third country benchmark by a supervised entity that has extensive cross border use, ESMA may conduct binding mediation. Six months before the entry into force of this regulation ESMA shall produce a report on the implementation of IOSCO principles. The procedure under this paragraph shall be reviewed after five years in the light of international regulatory convergence and in particular whether to extend the duration of its application.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 20 – paragraph 3 – point c a (new)

(ca) The supervision of activities that have been outsourced to the third country in accordance with Article 6.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 23 – paragraph 1

1. The administrator shall submit an application for authorisation to the competent authority of the Member State in which the administrator is located within thirty days of becoming aware that criteria according to Article 5 apply. As part of its application, an administrator shall indicate those indices, or series of indices that it considers suitable for use as benchmarks. An administrator may also apply to be exempted on a case-by-case basis from complying with some or all of the requirements set out in Annex I, if the administrator is able to demonstrate that the requirements are not proportionate, in view of the calibrated application of the regulation, in relation to: (i) the types and sources of data used in the calculation and determination of the benchmark; (ii) the benchmark methodology; (iii) the potential risks posed by the benchmark to market integrity and its vulnerability to manipulation; and (iv) whether the benchmark is a critical benchmark.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 24 – paragraph 1 – point d a (new)

(da) has transferred the functions as administrator of its benchmarks to another administrator who is appropriately authorised;

2013/12/20
Committee: ECON

Proposal for a regulation
Article 25 – paragraph 1

1. ~~Whenever~~If a competent authority becomes aware that an index for which there is no benchmark statement is being used as a reference to a financial instrument, or that a request for admission to trading has been made to a trading venue supervised by that competent authority in respect of a financial instrument that references an index, that competent authority shall notify ESMA within 10 working days.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 25 – paragraph 2

2. Within 10 working days of any notification ESMA shall notify the relevant administrator of the ~~benchmark~~index providing full details of its use and requesting the administrator to confirm that it consents to this use of the index for use as a benchmark within 10 working days.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 26 – paragraph 2

2. A competent authority may delegate some of its tasks under this Regulation to ESMA subject to the agreement of ESMA. Delegation of tasks shall not affect the responsibility of the delegating competent authority. Where a critical benchmark relies on contributions distributed significantly among several Member States, ESMA may assume responsibility for supervision with the consent of the authorities of those Member States. By agreement ESMA may also delegate specific tasks to the competent authority of a specific Member State with a strong geographical or historical connection with the benchmark, administrator or relevant industry.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 30 – paragraph 2 – subparagraph 2

For the exercise of those powers, competent authorities shall have in place adequate and effective safeguards in regard to the right of defence and fundamental rights. Wherever possible competent authorities shall make use of existing data reporting streams under reporting requirements in EMIR, MiFID and REMIT.

2013/12/20
Committee: ECON

Proposal for a regulation
Article 39 – paragraph 4

4. The use of a benchmark shall be permitted by the relevant competent authority of the Member State where the administrator is located until ~~such time as the benchmark references~~the termination of the financial instruments and financial contracts ~~worth no more than 5% by value of the~~that referenced this benchmark at the time of entry into force of this Regulation. No new financial instruments ~~and~~or financial contracts tshatll reference~~d this~~ such an existing benchmark atfter the ~~time of entry into force of this Regulation. No financial instruments or financial contracts shall reference such an existing benchmark after the entry into application of this Regulation.~~ entry into application of this Regulation. ESMA shall develop draft regulatory technical standards, after close consultation with ACER in the case of point (c), to specify: (a) information to be provided by an administrator in the application for authorisation in order to reasonably demonstrate that frustration, force majeure or breach of a contract could happen; (b) the circumstances in which frustration, force majeure and breach of the terms of any financial contract are regarded to occur in accordance with this Regulation; (c) calibrated and proportional transitional procedures for critical and sectoral benchmarks in particular for interest-rates and commodities. Power is delegated to the Commission to adopt the regulatory technical standards referred to in the first subparagraph in accordance with the procedure laid down in Articles 10 to 14 of Regulation (EU) No 1095/2010 and subject to a third month extension [as provided for in Omnibus 2]

2013/12/20
Committee: ECON

Proposal for a regulation
Article 41 – paragraph 2

It shall apply from [12 months after entry into force for critical benchmarks and 6 months after entry into force after publication of relevant delegated acts and technical standards under Article 5 ].

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 1 – section 1 – part I – point 7

7. Where Administrators receive input data from employees of a front office function, where available the Administrator shall obtain data from other sources that can corroborate that input data. The administrator shall publish information concerning the extent to which the data used was corroborated with data from other sources.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 1 – section 1 – part II – point 10 – introductory part

10. The following oversight function ~~shall~~s may be con~~e of the following~~sidered appropriate:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 1 – section 1 – part II – point 10 a (new)

10a. The oversight function shall ensure that, without diluting the direct responsibility of the Administrator for the production of a benchmark, there is a clearly defined and documented process for review of the production activity and compliance with the agreed and documented production processes. In establishing the oversight function, the Administrator shall take due account of its ownership structure and the role of contributors and users in the oversight function to ensure that no individual or collective interest group has an undue role or influence in the oversight function. In all cases, and especially where there is a risk of conflicts of interest, the oversight function must be at arm’s length from the routine production process of the benchmark. The role of the oversight process is to review, but not to engage in, the production process.

2013/12/20
Committee: ECON

Olle SCHMIDT, Sharon BOWLES, Anne E. JENSEN, Nils TORVALDS

Proposal for a regulation
Annex 1 – section 3 – part I – point 1 – point c a (new)

(ca) a process for controlling the existence of systems for identification of potential breaches of the [Market Abuse Regulation or Directive] and a whistleblowing procedure.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 2 – point 5 – introductory part

5. In the absence of sufficient transaction data in paragraph 1, in accordance with Article 7(1)(a), quotes by third parties to contributors in the same markets and expert judgement may be used to determine the input data. This data must be anchored by observable transactions between buyers and sellers in the market for the interest the benchmark measures in order for it to function as a credible indicator of prices, rates, indices or values. Input data may also be adjusted to ensure the input data is representative of, and consistent with, the inter-bank market. In particular, the input data in paragraph 1 may be adjusted by application of the following criteria:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 2 – point 16 – point d

(d) effective conflicts of interest management procedures and communication controls, both within contributors and between contributors and other third parties, to avoid any inappropriate external influence over those responsible for submitting rates. Submitters shall work in locations physically separated from interest rate derivatives traders or provide explanations as to why that is disproportionate;

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – paragraph 1

This Annex is the only Annex in this Regulation which applies to ‘commodity benchmarks’ which means a benchmark where the underlying asset for the purposes of Article 3(1)(c) is a commodity within the meaning of point (2) of Article 2 of Commission Regulation (EC) No 1287/2006~~28 . __________________ 28~~[1] which fall within this Regulation. Article 5(1), 5(2), 7(1), 8(2), 9(2) and 15 shall not apply. Although this Annex articulates uniform requirements, it does not contemplate a ‘one-size-fits-all’ method of implementation to achieve compliance. For example, differences in methodological approach or in the specific measures implemented by administrators to obtain bona fide data and other information are consistent with these provisions, as long as the approaches and measures meet the objectives set out in this Annex. Nothing in this Annex is intended to restrict an administrator from adopting its own unique methodologies or from adapting their methodologies to changing market conditions. The various measures set out in this Annex shall be implemented in accordance with a ‘reasonableness’ standard. (1a)(new) An administrator should formalise, document, and make public any methodology that it uses for a benchmark. (1b)(new) A methodology should aim to achieve benchmarks which are reliable indicators of market value, free from distortion and representative of the particular market to which they relate. __________________ 28 OJ L 241, 2.9.2006, p. 1. OJ L 241, 2.9.2006, p. 1.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 1 – introductory part

1. ~~For the purposes of Articles 8, 9 and 16, the methodology and the description of the methodology in the benchmark statement shall include the following elements~~The methodology shall contain and describe:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 1 – point c

(c) the relative importance that generally shall be assigned to each criterion used in benchmark calculation, in particular the type of market data used, and the type of criterion used to guide judgement so as to ensure the quality and integrity of the benchmark calculation. This is not intended to restrict the specific application of the relevant methodology but is to ensure the quality and integrity of the benchmark;

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 1 – point e

(e) criteria that address the assessment periods where the submitted data fall below the methodology’s recommended transaction data threshold or the requisite administrator’s quality standards, including any alternative methods of assessment including theoretical estimation models. Those criteria should explain the procedures used where no transaction data exists;

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 3 – introductory part

3. ~~In accordance with Article 7(1)(e) a~~An administrator shall adopt and make public to users’ explicit procedures and the rationale of any proposed material change in its methodology. Those procedures shall be consistent with the overriding objective that an administrator must seek to ensure the continued integrity of its benchmark calculations and implement changes for good order of the particular market to which such changes relate. Such procedures shall provide:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 4 a (new)

4a. An administrator shall establish and maintain a permanent and effective oversight function, which operates independently, to review and approve procedures for cessation of the benchmark, including any consultation about a cessation.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 5 – introductory part

5. ~~In accordance with Article 8 and 9, a~~An administrator shall:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 5 – point b – introductory part

(b) ~~give~~utilise input data, giving priority to input data in the following order, where consistent with the administrator’s ~~methodologies~~approach to ensuring the quality and integrity of a benchmark:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 5 – point b – paragraph 1

~~If concluded and report~~Nothing in this provision is intended to restrict an administrator’s flexibility in using input data consistent with its methodologies. However, if concluded transactions are not given priority, the reasons should be explained as called for in point 6(b).

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 5 – point d

(d) establish and employ procedures to identify anomalous ~~or suspicious~~(i.e. in the context of an administrator’s methodology) transaction data and keep records of decisions to exclude transaction data from the administrator’s benchmark calculation process;

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 5 – point f

(f) employ a system of appropriate measures so to enassure ~~that~~, to the extent possible, contributors comply with the administrator’s quality and integrity standards for market data.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 6 – introductory part

6. An administrator shall describe and publish ~~with each calculation~~regularly with each benchmark, to the extent ~~possi~~reasonable without prejudicing due publication of the benchmark:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 6 – point a

(a) a concise explanation, sufficient to facilitate a benchmark subscriber’s or competent authority’s ability to understand how the calculation was developed, including, at a minimum, the size and liquidity of the physical market being assessed (~~such as~~meaning the number and volume of transactions submitted), the range and average volume and range and average of price, and indicative percentages of each type of market data that have been considered in a calculation; terms referring to the pricing methodology shall be included such as ‘transaction-based’, ‘spread-based’ or ‘interpolated or extrapolated’;

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 6 – point b

(b) a concise explanation of the extent to which, and the basis upon which, judgment ~~including the~~(meaning exclusions of data which otherwise conformed to the requirements of the relevant methodology for that calculation, basing prices on spreads or interpolation, extrapolation, or weighting bids or offers higher than concluded transactions), if any, was used in any calculation.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 7 – introductory part

7. ~~In accordance with Article 5, a~~An administrator shall:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 7 a (new)

7a. Code of Conduct for contributors In accordance with Article 9(1), an administrator shall adopt a code of conduct which shall: (a) specify the responsibilities of contributors with respect to the input data provided to administrators (b) encourage the provision of input data that is consistent with the administrator’s approach to ensuring the quality and integrity of a benchmark (c) provide guidance as to who may contribute input data to the administrator (d) encourage contributors to provide all relevant input data (e) encourage contributors to establish: (i) procedures for submitting input data; (ii) policies preventing the misuse of discretion by the contributor in providing input data; (iii) record keeping policies of the contributors; (iv) conflict management processes (f) encourage contributors to comply with all applicable laws.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 8 – introductory part

8. ~~In accordance with Article 5, a~~An administrator shall:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 8 – point b

(b) maintain continuity and succession planning in respect of its assessors in order to seek to ensure that calculations are made consistently and by employees who possess the relevant levels of expertise;

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 8 – point c

(c) institute internal control procedures designed to ensure the integrity and reliability of calculations. At a minimum, such internal controls and procedures shall require (a) the on-going supervision of assessors to seek to ensure that the methodology was properly applied; and (b) procedures for internal sign-off by a supervisor prior to releasing benchmarks for dissemination to the market.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 9 – introductory part

9. ~~In accordance with Article 5, a~~An administrator shall have rules and procedures in place to document contemporaneously relevant information, including:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 10

10. ~~In accordance with Article 5, a~~An administrator shall have rules and procedures in place to ensure that an audit trail of relevant information is retained for at least five years in order to document the construction of its calculations.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 11 – introductory part

11. ~~In accordance with Article 5, an~~ An administrator’s conflicts of interest policies and procedures shall be designed to:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 12

12. An administrator shall ensure that its other business operations have in place appropriate procedures and mechanisms designed to minimise the likelihood that conflicts of interest will affect the integrity of benchmark calculations.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 13 – introductory part

13. An administrator shall ensure it has appropriate segregated reporting lines amongst its managers, assessors and other employees and from the managers to the administrator’s most senior level management and its board (if any), designed to ensure:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 14

14. An administrator shall disclose to its ustakeholders as soon as it becomes aware of a conflict of interest arising from the ownership of the administrator. An administrator shall put in place policies and procedures to specifically mitigate conflicts due to the administrator’s ownership or control, or due to other interests in its group or as a result of other persons that may exercise influence or control over the administrator in relation to setting the benchmark.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 15 – introductory part

15. ~~In accordance with Article 5, a~~An administrator shall have in place and publish written procedures for receiving, investigating and retaining records concerning complaints made about an administrator’s calculation process. Such complaint mechanisms shall ensure that:

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 16 a (new)

16a. An administrator shall establish and maintain a permanent and effective oversight function which operates independently and which shall assess internal and external audits or reviews, and monitor the implementation of identified actions.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 16 b (new)

16b. An administrator shall appoint an internal function, with the necessary capability to review and report on the administrator’s adherence to the benchmark methodology and this Regulation.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 16 c (new)

16c. Upon the request of the relevant competent authority the administrator shall provide or publish details of the reviews in point 17 or audits under point 18.

2013/12/20
Committee: ECON

Proposal for a regulation
Annex 3 – point 16 d (new)

16d. Oversight Functions 1. The oversight function shall be one of the following: (a) where the administrator is owned or controlled by contributors or users, a separate board or committee, whose composition ensures its independence and the absence of conflicts of interest. Where the administrator is owned or controlled by contributors, a majority of the committee should not be contributors. Where the administrator is owned or controlled by users, a majority of the committee should not be users; (b) where the administrator is not owned or controlled by its contributors or users, an internal board or committee. The members of the internal board or committee shall not be involved in the provision of any benchmark they oversee; (c) where the administrator is able to demonstrate that in view of the nature, scale and complexity of its provision of the benchmark, and the risk and impact of the benchmark, the requirements under points (a) and (b) are not proportionate, a natural person may provide the function of oversight officer. The oversight officer must not be involved in the provision of any benchmark they oversee. (d) The oversight function may exercise oversight of more than one benchmark provided by an administrator provided that it otherwise complies with the other requirements of this section.

2013/12/20
Committee: ECON