Benchmarks Regulation

The AFM is responsible for granting authorizations and registrations to benchmark administrators located in the Netherlands, and for ensuring compliance with the BMR of benchmark administrators, contributors, and users in the Netherlands.

The AFM is also responsible for the endorsement of third country benchmarks by supervised entities located in the Netherlands. The AFM is also responsible for the endorsement of third country benchmarks by supervised entities located in the Netherlands.

Moreover, the AFM collaborates internationally with other national competent authorities, ESMA and the European Commission.

Applications

Index administrators located in the EU whose indices qualify as benchmarks under the BMR are required to apply for authorization or registration.

If you are interested in applying for a licence as a benchmark administrator or in endorsing third country benchmarks, please contact the AFM via benchmarks@afm.nl.

Recognised third country benchmark administrators and administrators providing critical benchmarks are under the direct supervision of ESMA.

ESMA registers

ESMA holds registers with all licensed benchmark administrators (Benchmarks administrators) and third country benchmarks endorsed or provided by recognized administrators (Third country benchmarks).

Complaints and suspicious market behaviour

Market participants are asked to report any complaints about benchmarks and benchmark administrators, or any suspicious market behavior related to a benchmark to the AFM via benchmarks@afm.nl.

What is the focus of the BMR?

The BMR has the following objectives:

• Improving governance and controls over the benchmark process, in particular to ensure that administrators avoid conflicts of interest, or manage them adequately;
• Improving the quality of input data and methodologies used by benchmark administrators;
• Ensuring that contributors to benchmarks and the data they provide are subject to adequate controls, in particular to avoid conflicts of interest;
• Protecting consumers and investors by providing greater transparency and ensuring adequate rights of redress.

The BMR has introduced key requirements with respect to:

• The governance of and control by administrators over the benchmark process;
• Ensuring that administrators avoid conflicts of interest and have policies and procedures how to manage them adequately;
• The input data used for determining a benchmark;
• The methodology used for determining a benchmark;
• The code of conduct that an administrator shall have in place for its contributors;
• ESG disclosure.

The BMR imposes different requirements for administrators providing commodity and interest rate benchmarks.

What is an index?

The BMR defines an index as any figure:

• that is published or made available to the public;
• that is regularly determined:

- entirely or partially by the application of a formula or any other method of calculation, or by an assessment; and
- on the basis of the value of one or more underlying assets or prices, including estimated prices, actual or estimated interest rates, quotes and committed quotes, or other values or surveys.

What is a benchmark?

An index becomes a benchmark where the index is used:

Requirements for benchmark users

A supervised entity (art. 3(17) BMR) uses a benchmark whenever it:

• issues a financial instrument which references an index or a combination of indices;
• determines the amount payable under a financial instrument or a financial contract by referencing an index or a combination of indices;
• is a party to a financial contract that references an index or a combination of indices;
• provides a borrowing rate calculated as a spread or mark-up over an index or a combination of indices and that is solely used as a reference in a financial contract to which the creditor is a party;
• measures the performance of an investment fund through an index or a combination of indices for the purpose of (i) tracking the return of such index or combination of indices, (ii) defining the asset allocation, or (iii) computing the performance fees.

Benchmark users that fall within the scope of the BMR need to comply with specific requirements outlined in:

• Article 28(2) BMR: requirements for robust written plans in case of changes to and cessation of a benchmark; and
• Article 29 BMR: requirements regarding the use of benchmarks in the EU.