15.4.2014

EN

Official Journal of the European Union

C 113/1

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OPINION OF THE EUROPEAN CENTRAL BANK

of 7 January 2014

on a proposal for a regulation on indices used as benchmarks in financial instruments and financial contracts

(CON/2014/2)

2014/C 113/01

Introduction and legal basis

On 18 October 2013 and 28 October 2013, the European Central Bank (ECB) received requests from the Council and from the European Parliament, respectively, for an opinion on a proposal for a regulation of the European Parliament and of the Council on indices used as benchmarks in financial instruments and financial contracts (1) (hereinafter the ‘proposed regulation’).

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union since the proposed regulation contains provisions affecting the European System of Central Banks’ contribution to the smooth conduct of policies relating to the stability of the financial system, as referred to in Article 127(5) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

1.   Purpose of the proposed regulation

1.1   The proposed regulation introduces a common Union regulatory framework for the regulation of published indices that serve as benchmarks to reference financial instruments and financial contracts, such as mortgage credit agreements, or to measure the performance of investment funds in order to ensure their integrity and accuracy and thereby to contribute to the functioning of the internal market while achieving a high level of consumer and investor protection (2).

1.2   The new framework regulates the entire process of setting benchmarks, from the contribution of quotes or other input data by market participants, the administration and control of the benchmark to the dissemination and publication thereof. More specifically, the proposed regulation aims to make benchmarks more reliable and robust so that they are less easily manipulated by market participants and to make the benchmark-setting process generally more transparent. It seeks to achieve this chiefly by strengthening the supervisory control of the quality of and the methodology for contributing input data to indices that may be used as benchmarks (3), and by enhancing governance and control over the entities administering the provision of the benchmark. Under the proposed scheme, administrators located in the Union are required to apply for authorisation from their home competent authority (4). As the administrator function is central to benchmark setting and involves discretion in how input data is translated into the benchmark, administrators must adopt a code of conduct and ensure that provision of data is not affected by any conflict of interest (5). The Commission has the power to decide which benchmarks located in the Union are ‘critical benchmarks’ and to adopt a list of such benchmarks at Union level (6).

1.3   As regards supervision and enforcement, under the proposed regulation, Member States must designate an authority or authorities responsible for these tasks (7) and notify those authorities to the European Securities and Markets Authority (ESMA). For critical benchmarks, as they are more likely to have cross-border effects, the competent authority of the administrator must establish a college of competent authorities comprising that authority, ESMA, the competent authorities of the contributors and other competent authorities where justified, and it must also establish written arrangements within the college, inter alia, on the assistance to be provided to the said competent authority to enforce certain measures relating to mandatory contribution to a critical benchmark (8). In the absence of agreement within the college on whether to take certain specified measures (9), the administrator’s competent authority may adopt a decision on the matter, provided any deviation from the opinions of other members of the college, and where appropriate ESMA, is fully reasoned. In addition, where, inter alia, either the competent authorities have failed to agree on the written arrangements or where there is disagreement with a measure that has been taken; ESMA may take a decision either upon referral from another member of the college or on its own initiative under the ‘binding mediation’ procedure (10). The proposed regulation also provides for an equivalence regime to be administered by ESMA for third country administered benchmarks (11).

1.4   The proposal also complements the Commission’s recent proposals to include the manipulation of benchmarks as a market abuse offence subject to strict administrative fines in the new market abuse regime (12). From an international perspective, the proposed regulation is stated to be in line with the principles for financial benchmarks issued in July 2013 by the International Organization of Securities Commissions (IOSCO) (13).

2.   General observations

The ECB supports the proposed regulation’s objective of establishing a common set of rules at Union level for the benchmark-setting process for financial instruments (14) and financial contracts (15) in the interest of integrity and reliability of the financial benchmarks and the wider concern of protection of investors and consumers. The ECB considers that the regulatory response is justified and proportionate to the deficiencies that have been identified in the benchmark-setting process. The restoring of integrity and public confidence in financial benchmarks is all the more important in the wake of recent alleged manipulation of the key interbank interest rate benchmarks Libor and Euribor, which have led in a number of instances to significant fines and allegations of misuse of other indices. For the Eurosystem, it is critical to safeguarding the integrity and reliability of these key benchmarks that the quality of the contributions (input data) to these indices and the integrity of their administrator is maintained.

In the Eurosystem’s response to the Commission’s 2012 public consultation on the regulation of indices (16), the ECB stressed the systemic importance of the Euribor benchmark for financial stability and made specific recommendations on both short and medium to longer term measures for improving the integrity and reliability of Euribor and other such benchmarks. The ECB, together with the national central banks (NCBs) of the Eurosystem, has also provided Eurosystem responses to other similar consultations on the future of benchmark indices, both at Union and international levels (17).

The ECB would also like to make a few forward looking remarks on the reform of critical interest rate benchmarks. While progress has been made in strengthening the governance process and restoring credibility, further steps need to be taken. The ECB strongly supports market initiatives that aim at identifying transaction-based reference rates that could constitute viable complements or substitutes to Euribor and support facilitating market choices in a changing financial system so that users can choose reference rates which better match their needs. Furthermore, the design of new reference rates needs to consider the sound principles for reference rates put forward by ESMA, the European Banking Authority (EBA), and IOSCO. Therefore, the ECB strongly encourages market participants to be actively involved in the rate design process, in order to ensure that the resulting rate meets the market’s needs. It is also very important in this transitional phase to new reference rates that any Union framework is workable for market participants. This is particularly crucial as the proposed regulation is very broad in scope. The ECB would also like to stress that its specific observations below are focused primarily on the impact of the regulation on the key interest rate benchmarks.

3.   Specific observations

3.1   Scope, exclusion of indices and benchmarks provided by central banks and definition

3.1.1   The ECB supports the wide scope of application of the proposed regulation, which covers all benchmarks that are used to reference financial instruments admitted to trading or traded on a regulated venue, such as energy, commodities and currency derivatives, as well as financial contracts and the value of investment funds (18). This is appropriate in view of the extensive and wide ranging use of benchmarks in domestic and international financial markets and, hence, their considerable potential for negatively impacting investors and consumers of less sophisticated financial products, such as mortgages.

3.1.2   The ECB welcomes the express exclusion from the scope of the proposed regulation of central banks that are members of the European System of Central Banks (ESCB) as they already have systems in place to ensure compliance with its objectives (19). The ECB suggests however extending the exemption to all central banks as the benchmarks and indices provided by them are already subject to control by public authorities. Those controls are designed to comply with principles, standards and procedures which ensure the accuracy, integrity and independence of the benchmarks and indices (20). It would also be duplicative for central banks — and indeed public authorities in general — to be subject to the proposed regulation, given that administrators will be subject to supervision by their national competent authority. Therefore, it is not necessary to include central banks and their benchmarks and indices in the proposed regulation (21), and indeed the ECB would not be opposed to extending the exemption to all public authorities. This is consistent with the IOSCO principles on benchmark setting, a recent report on which stated that benchmark administration by a national authority used for public policy purposes is not within their scope (22).

Furthermore, as regards the definition of ‘interbank interest rate benchmark’ (23), the ECB notes that the special regime laid down in Annex II covers only such benchmarks which are based on interest rates at which banks may lend to or borrow from each other. In the ECB’s view the regime should be less restrictive and also include benchmarks where the underlying asset is the rate at which a bank may lend to or borrow from the wholesale market (24). The wholesale market may cover agents other than banks.

3.2   Benchmark integrity and reliability and the authorisation and supervision of administrators  (25)

3.2.1   The ECB welcomes the fact that the input data to be submitted by contributors must be transaction data and that other data may only be used if the available transaction data are not sufficient to represent accurately and reliably the market or economic reality that the benchmark is intended to measure, provided they are verifiable (26).

3.2.2   However, the Union legislative bodies should take particular care to ensure that, in pursuing the justified goals of the proposal, the toughening of the regulatory requirements on administrators (27) does not inadvertently dissuade new entrants to such a critical function nor discourage too strongly current administrators from this function, especially during the current period of transition to possible new reference rates (28). Such barriers to entry could lead to a sub-optimal list of benchmarks which may not meet users’ needs.

3.2.3   Furthermore, for the purpose of determining where the threshold of ‘50 % of [the] value of transactions in the market’ lies, which is required in Article 7(1)(c) of the proposed regulation for the administrator to determine whether for non-transaction-based benchmarks an underlying market exists, clarification is needed on how the administrator is to arrive at a robust and challenge-resistant assessment of what constitutes a market for the purposes of making this determination, given that ‘market’ is an economic notion derived from competition law and not further defined in the proposed regulation.

3.2.4   The ECB also notes that under the proposed regulation administrators and contributors to benchmarks in the Union will be supervised by competent authorities designated by the Member States, and that administrators of benchmarks will require authorisation by these authorities. The ECB has previously stated its view (29) that, given the systemic importance of Euribor for the Union financial markets and its role in monetary policy transmission, the European Supervisory Authorities (ESAs) should be involved in the supervision of the Euribor rate-setting process. The ECB believes that authorities such as ESMA and the EBA are well placed to assume such a role. The ECB welcomes, therefore, the proposal for the Commission to adopt delegated acts based on technical standards prepared by ESMA on specified matters in the benchmark-setting process and the proposed ESMA power to carry out ‘binding mediation’ in coordinating cooperation between competent authorities within the Union (30) and its role in registering and withdrawing the registration of administrators located in third countries (31). Moreover, the terminology of location of legal or natural persons, as defined in the proposed regulation, should be used consistently throughout the text (32). The ECB also welcomes the fact that competent authorities may delegate some of their tasks under the proposed regulation to ESMA, subject to the latter’s agreement (33).

3.3   Sectoral requirements, critical benchmarks and mandatory contribution  (34)

3.3.1   The proposal contains regulatory requirements for different types of benchmarks and sectors and a special regime for ‘critical benchmarks’ (35). The ECB supports the elements of such a stricter regime for critical benchmarks. The ECB also welcomes the fact that the proposed regulation makes provision for supervised entities to contribute input data on a mandatory basis to a critical benchmark (36). This is an important back-stop in the event, which cannot be excluded, that there is a market failure and the contributions from transaction-based data dry up or are not available (37). The ECB is concerned, however, that the current definition of a ‘critical benchmark’ (38), which requires that the majority of the contributors are supervised entities and that the ‘reference financial instruments have a notional value of at least 500 billion euro’ may not provide a secure enough basis for the emergence of new critical benchmarks, such as for interbank interest rates. In addition to constituting a potential barrier to entry, a further drawback of the proposed definition is the difficulty in evaluating whether the numerical threshold is met. For this reason, the ECB sees merit in retaining a more flexible definition based on financial stability considerations (39).

3.3.2   The ECB has serious concerns about the proposed wording of the threshold for triggering the power to require mandatory contribution. As presently drafted, Article 14 grants the administrator’s competent authority certain powers which it may exercise to ensure that supervised entities continue to feed in contributions to the benchmark, and it may require them to take other steps (40) in a situation where ‘contributors, comprising at least 20 % of the contributors to a critical benchmark have ceased contributing, or there are sufficient indications that at least 20 % of the contributors are likely to cease contributing, in any year’. However, there could be situations where over several years a number of panel member institutions cease to contribute input data but, all the same, in any given year (on a rolling or calendar basis) the number of cessations does not reach 20 % of all contributors to the benchmark and, thus, does not trigger the competent authority’s powers to intervene. As a result, this may lead to the slow death of a critical benchmark without the possibility of invoking any mandatory scheme. This may have serious implications with respect to the representativeness of the panel. Although the administrator has an obligation to ensure that input data is obtained from a panel or sample of contributors that is reliable and representative (41), without the trigger of mandatory contributions, deficiencies in the input data for a benchmark may have serious implications for financial stability and the orderly functioning of the markets. In view of the critical nature of these benchmarks and having regard to financial stability and smooth market functioning considerations, the ECB strongly recommends not to rely on a numerical test, which may be easily circumvented and whose trigger may never be reached, but to replace it with qualitative criteria related to financial stability considerations. Consequently, the ECB strongly recommends that the administrator be required to evaluate at regular intervals and whenever the panel size decreases whether the panel remains representative and, in particular, whether any decrease in size results in the input data being obtained from an insufficiently representative set of contributors (42). The ECB notes in this regard that Article 7(1)(b) of the proposed regulation requires the administrator to ‘obtain the input data from a reliable and representative panel or sample of contributors so as to ensure that the resultant benchmark is reliable and representative of the market or economic reality that the benchmark is intended to measure (“Representative contributors”)’. In this connection, the ECB recommends that Article 14(2) specifies explicitly that the supervised entities selected to contribute on a mandatory basis to the critical benchmark may include supervised entities that are not panel institutions.

3.3.3   In the case of critical benchmarks, the proposed regulation also requires the competent authorities of contributors to ‘assist’ the competent authority of the administrator of the benchmark in the enforcement of measures specified pursuant to Article 14(1)(a) and (b) (43), including a requirement for supervised entities to contribute on a mandatory basis to the benchmark. The ECB understands that, where, either the competent authority of the administrator has taken a decision on any of these measures but there is disagreement in the college on the measure(s) taken, or there is no agreement on the written arrangements to be drawn up for the enforcement of the measures by the competent authority of the administrator, the matter may be referred to ESMA, which may then take a decision under the procedure specified in Article 19 of Regulation (EU) No 1095/2010.

3.4   Supervisory cooperation

In relation to each critical benchmark, the proposed regulation provides for the establishment of a college of competent authorities (44). The ECB has concerns however about the workability of such a procedure in the case of critical financial benchmarks, particularly in the case of an emergency such as a market failure. Moreover, these arrangements should not affect the banking supervisory responsibilities of the ECB under the regulation conferring upon the ECB specific tasks in the area of prudential supervision of credit institutions (45). This regulation confers on the ECB prudential supervisory tasks, but not tasks related to the supervision of the conduct of business, in respect of credit institutions (46). Therefore, the ECB understands that national competent authorities remain responsible for the supervision of benchmarks. However, to remove any possible doubt that the responsibility for the supervision of the financial conduct of institutions which come under the single supervisory mechanism (SSM) remains with the national competent authorities, the regulation should specify that the competent authority to be designated by Member States must be a national competent authority.

3.5   Transparency and consumer protection

3.5.1   The ECB notes that, under Article 16(1) of the proposed regulation, an administrator is required to publish the input data used to determine the benchmark immediately after publication of the benchmark, except where publication would have serious adverse consequences for the contributors or adversely affect the reliability or integrity of the benchmark, in which case publication may be temporarily delayed for a period that significantly diminishes the consequences. The ECB understands further that the provisions of the proposed regulation prohibiting the competent authority, its employees and any delegated agent thereof from disclosing ‘information covered by professional secrecy’ to any other person do not apply to the administrator of the benchmark and, thus, do not prevent the administrator from ultimately publishing the input data even where it contains information of the kind specified in Article 16 of the proposed regulation. However, it is doubtful whether this data provides additional value to users. The proposed regulation should ensure instead that users can be confident about the reliability of the data by the proper oversight, supervision, archiving and auditing thereof. In addition, in relation to transaction-based benchmarks, situations may arise where the input data to be published includes data which is commercially sensitive or subject to business confidentiality, for example, if volume data for transactions is included in the input data. Therefore the administrator should not be required to publish the data even with a delay, unless the relevant contributor has given its prior approval, but it would be sufficient for the administrator to be required to store the data for a certain period during which the competent authority would upon request have access thereto (47). This would be less burdensome for contributors, while enabling the administrator’s competent authority to have access to the data to oversee its accuracy and sufficiency.

3.5.2   The transparency provisions oblige the administrator of a benchmark to publish a procedure of actions to be taken in the event of material changes to or cessation of the benchmark. Likewise, supervised entities and users are also obliged to publish robust plans setting out the actions they would take in such an event (48). However, neither these provisions, nor the provisions addressing transitional arrangements (49), establish a requirement for contingency plans in the event of an abrupt disruption to a benchmark. The ECB recommends, therefore, that the proposed regulation includes a requirement for the benchmark administrator to develop its own contingency procedures, with full transparency towards the end users of the indices. It is suggested that such provisions are included in the code of conduct of the benchmark administrator as an additional requirement under paragraph 1 of Section D of Annex I to the proposed regulation (50).

3.5.3   Supervised entities such as credit institutions are required to assess whether referencing a financial contract to be concluded with a customer to a benchmark is suitable for use by the customer. In ensuring its suitability, the entity is required to obtain the necessary information on that benchmark, including the administrator’s public benchmark statement (51). The ECB recommends that the Union legislative bodies clarify how this obligation will be reflected in the Commission proposal on credit agreements relating to residential property (52), as the proposed regulation includes mortgages in the definition of financial contracts.

3.6   Use of benchmarks provided by third country administrators  (53)

3.6.1   The ECB notes that, under the proposed equivalence regime in Article 20, benchmarks provided by administrators established in third countries are required to fulfil certain specified conditions, including obtaining a decision from the Commission recognising that their legal framework and supervisory practices are equivalent to that of the proposed regulation, before such benchmarks may be used by supervised entities in the Union. The ECB also notes that such benchmarks do not appear to benefit from the transitional provisions under Article 39, as these appear only to govern existing benchmarks whose administrator must apply for authorisation to the competent authority of the Member State where the administrator is located, i.e. administrators located in the Union.

3.6.2   The ECB is concerned about the workability of the proposed equivalence regime, particularly if it were to be introduced concurrently with the other provisions of the proposed regulation. Many important investment products in the Union, particularly in derivatives and investment funds, reference non-Union benchmarks. Although IOSCO has published principles on benchmark setting and encourages countries to implement them (54), this remains a matter for each country and, hence, it is uncertain whether all IOSCO members will implement them by means of legislation. As the Commission’s positive equivalence decision under the proposed regulation must state that the third country’s legal framework ensures that the requirements of the regulation, including the governance and control requirements on administrators, are legally binding and subject to effective supervision and enforcement (55), it may be difficult for many third country legal frameworks, including those of G20 countries, to satisfy the equivalence conditions, for example, where they do not subject their administrator and contributors to supervisory requirements (56). In consequence, a wide range of products referencing such third country administered benchmarks would have to be withdrawn and the potential impact of such a move on financial stability could be significant.

3.6.3   Further, the ECB notes that the proposed equivalence regime does not provide clear guidance on the consequences for contracts that currently reference such benchmarks should those benchmarks not pass the equivalence test, since the transitional provisions in Article 39 appear to apply only to Union benchmarks.

3.6.4   For these reasons, rather than leaving the use of non-Union benchmarks in limbo, the ECB invites the Union legislative bodies to consider introducing as a minimum a longer implementation period for the equivalence regime under which selected widely-used benchmarks administered in third countries, in particular G20 countries, could continue to be used in the Union until the end of a longer transitional period of three years. For such benchmarks, the third country administrator would be required to demonstrate compliance with the IOSCO Principles in the context of its domestic legal framework. As a result, the benchmark would be temporarily exempted from the equivalence requirements provided for in Article 20 of the proposed regulation. It is important, however, to balance the concern for financial stability within the Union with the wider concern for a level playing field between all administrators of critical benchmarks that are widely used in the Union. To achieve such balance, the ECB envisages a role for ESMA to periodically review, on behalf of the Commission, whether deferring implementation of the equivalence regime for non-Union based administrators (57) is still warranted.

4.   Other international aspects

In the Eurosystem response to the September 2012 Commission consultation on regulation of indices (58), the ECB stressed the importance in this area of ensuring proper coordination of legislative initiatives at national and Union levels with international initiatives. In this connection, the ECB observes that the Financial Stability Board’s Official Sector Steering Group, of which the ECB is a member, is currently considering the future of financial benchmarks for the banking sector along with market participants.

Where the ECB recommends that the proposed regulation is amended, specific drafting proposals are set out in the Annex accompanied by explanatory text to this effect.

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(1)  COM(2013) 641 final.

(2)  See Article 1 of the proposed regulation. The scope of the proposed regulation is broad, covering a wide variety of benchmark indices, including all benchmarks that are used to reference financial instruments admitted to trading or traded on a regulated venue, such as energy, commodities and currency derivatives.

(3)  See Articles 7 and 8 of the proposed regulation.

(4)  See Article 22 of the proposed regulation. Thus, as Article 19 specifies, supervised entities may only use a benchmark covered by the proposed regulation if it is provided by an administrator authorised in accordance with Article 23 or registered in accordance with Article 21.

(5)  e.g. if the membership of the administrator, or a panel run by it, includes market participants which contribute input data to the index.

(6)  See Article 13 of the proposed regulation. In relation to critical benchmarks, administrators must notify and obtain approval from the competent authority for the code of conduct.

(7)  See Article 29 of the proposed regulation. The supervisory and investigative powers of competent authorities are set out in Article 30 and their administrative sanctions in Article 31.

(8)  See Article 34(1) and (6) of the proposed regulation. The relevant measure relating to mandatory contribution is Article 14(1)(a) and (b).

(9)  These include measures concerning mandatory contribution (Article 14), authorisation of administrators (Articles 23 and 24) and administrative measures and sanctions (Article 31).

(10)  This is established in Article 19 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

(11)  See Title V of the proposed regulation. Administrators of third country benchmarks must notify and register the benchmark with ESMA and the Commission must approve the third country regulatory regime as equivalent to the Union regime before it can be used by Union supervised entities.

(12)  See the amended proposal for a regulation of the European Parliament and of the Council on insider dealing and market manipulation (market abuse), COM(2012) 421 final, and the amended proposal for a directive of the European Parliament and of the Council on criminal sanctions for insider dealing and market manipulation, COM(2012) 420 final.

(13)  See the IOSCO final report on principles for financial benchmarks of 17 July 2013, available on IOSCO’s website at www.iosco.org

(14)  See Article 3(1)(13) of the proposed regulation.

(15)  According to Article 3(1)(15) of the proposed regulation, these are credit agreements and credit agreements related to residential property as defined in the relevant Union directives.

(16)  See European Commission’s public consultation on the regulation of indices — Eurosystem’s response, November 2012, pp. 2-3, available at www.ecb.europa.eu

(17)  See Eurosystem’s response to the EBA and ESMA’s public consultation on the principles for benchmark-setting processes in the EU and Eurosystem’s response to IOSCO’s consultation report on financial benchmarks, both published in February 2013.

(18)  Money market funds (MMFs) may also use indices to reference the price of financial instruments which they trade. See the proposal for a regulation of the European Parliament and of the Council on money market funds, COM(2013) 615 final, which requires MMFs to value their assets, should the mark to market method not be available, on a mark to model basis, which is a benchmark type methodology (see in particular recital 41 and Article 2(10) of that proposed regulation). MMFs will usually be structured either as alternative investment fund managers or as undertakings for collective investment in transferable securities, and as such are already included under the definition of supervised entities (see Article 3(1)(14)(e) and (f) of the proposed regulation).

(19)  See Article 2(2)(a) and recital 16 of the proposed regulation.

(20)  See Amendments 1 to 3.

(21)  It is noted in this regard that the draft report of the European Parliament’s Economic and Financial Affairs Committee (ECON) of 15 November 2013 [proposed to include NCBs within the scope of the proposed regulation (see Amendment 20 of the draft report). It acknowledges however (recital 20) that ‘outsourcing of calculation, where there is no discretion in the application of the formula, does not mean the calculator is an administrator for the purposes of this regulation.’ The draft report has not yet been voted on by the Committee. Available on the Parliament’s website at www.europarl.europa.eu

(22)  IOSCO final report on principles for financial benchmarks, see footnote 13.

(23)  See Article 3(1)(19) of and Annex II to the proposed regulation,

(24)  See Amendment 5. See also the chapter on interest reference rates in the ECB Monthly Bulletin of October 2013, p. 69, available on the ECB’s website at www.ecb.europa.eu

(25)  See Titles II and VI of the proposed regulation.

(26)  See Article 7(1)(a) of the proposed regulation.

(27)  See Chapter 1 of Title II of the proposed regulation.

(28)  See paragraph 3.3.2 where concerns over workability of the mandatory contribution thresholds are highlighted.

(29)  See European Commission’s public consultation on the regulation of indices — Eurosystem’s response, November 2012, p. 3.

(30)  This is provided for in Article 34 of the proposed regulation with reference to Article 19 of Regulation (EU) No 1095/2010.

(31)  See Articles 20 and 21 of the proposed regulation.

(32)  See Amendment 9 in relation to Article 20(1) where the term ‘administrator established in a third country’ is used.

(33)  See Article 26(2) of the proposed regulation.

(34)  See Title III of the proposed regulation.

(35)  See Article 3(1)(21) (definition) and Article 13 of the proposed regulation. In particular, the administrator of a critical benchmark is required to notify and have its code of conduct verified by the national competent authority as compliant with the regulation.

(36)  See Article 14 of the proposed regulation.

(37)  See Eurosystem’s response to the EBA and ESMA’s public consultation, see footnote 17.

(38)  See Article 3(1)(21) of the proposed regulation.

(39)  See Amendment 6.

(40)  See Article 14(1)(a) to (c) of the proposed regulation.

(41)  See Article 7(1)(b) in conjunction with Section C of Annex I to the proposed regulation.

(42)  See Amendment 6.

(43)  This provision grants the competent authority of the administrator with powers to (a) require supervised entities to contribute input data to the administrator in accordance with the methodology, code of conduct or other rules and (b) determine the form in which, and the time by which, any input data is to be contributed. The requirement to provide assistance is set out in Article 14(3).

(44)  See Article 34(1) and (2) of the proposed regulation.

(45)  Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring specific tasks on the European Central Bank concerning policies relating to the prudential supervision of credit institutions (OJ L 287, 29.10.2013, p. 63). See also Regulation (EU) No 1022/2013 of the European Parliament and of the Council of 22 October 2013 amending Regulation (EU) No 1093/2010 establishing a European Supervisory Authority (European Banking Authority) as regards the conferral of specific tasks on the European Central Bank pursuant to Council Regulation (EU) No 1024/2013 (OJ L 287, 29.10.2013, p. 5).

(46)  See Article 4(1) of Regulation (EU) No 1024/2013.

(47)  See Article 16 of the proposed regulation and Amendment 7.

(48)  See Articles 17 and 39 of the proposed regulation.

(49)  Article 39 of the proposed regulation.

(50)  See Amendments 8 and 18.

(51)  See Article 18(1) of the proposed regulation.

(52)  See proposal for a Directive of the European Parliament and of the Council on credit agreements relating to residential property, COM(2011) 142 final.

(53)  See Articles 20 and 21.

(54)  See footnote 13, see also the latest IOSCO communiqué of November 2013.

(55)  See Article 20(2)(b) in conjunction with Article 5 of the proposed regulation.

(56)  e.g. because the administrator is an unregulated market association. The ECB’s understanding based on feedback from market participants is that few jurisdictions outside the Union are intending to regulate anything other than major interest rate and certain forex and commodity benchmarks.

(57)  See Amendment 16.

(58)  See European Commission’s public consultation on the regulation of indices — Eurosystem’s response, November 2012, p. 8.

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