Council adopts regulation on financial benchmarks to ease burden on SMEs

The Council adopted on 24 March a regulation on financial benchmarks, which aims to cut red tape for EU companies, in particular for SMEs.

Benchmarks are generally used by companies and investors in the EU as a reference in their financial instruments or contracts.

This Regulation amends a 2016 Regulation as regards the scope of application of the benchmark rules, the use of benchmarks produced by administrators based in third countries and certain disclosure requirements.

Main elements of the revised Regulation

• Reducing the regulatory burden on administrators of benchmarks that are considered non-significant in the EU by removing them from the scope of the current rules.
• Only critical or significant benchmarks fall within the scope of the new Regulation.
• Managers outside the scope of the rules may apply for voluntary application (opt-in), subject to certain conditions.
• Extension of the competence of the European Securities and Markets Authority (ESMA).
• Managers of EU climate transition benchmarks and EU benchmarks harmonised with the Paris Agreement must be registered, authorised, recognised or approved in order to ensure regulatory oversight and avoid misleading ESG claims.
• A specific exemption regime for spot exchange rate benchmarks.

Next steps

The final text will be published in the Official Journal of the EU and will enter into force and apply from 1 January 2026.

Background

The Commission presented this proposal in 2023, as part of a package of measures to streamline financial reporting requirements.

In its Communication “The EU’s long-term competitiveness: beyond 2030”, the Commission underlined the importance of a regulatory system that allows the objectives to be achieved at the lowest possible cost. It therefore committed to a new drive to simplify and streamline reporting obligations, with the ultimate aim of reducing administrative burdens by 25%, without undermining the corresponding policy objectives.

More information: Council of the European Union