FCA welcomes reform to the UK Benchmarks Regulation
Executive Summary
The FCA welcomes HM Treasury's consultation on reforming the UK Benchmarks Regulation (BMR) to create a narrower, risk-based **Specified Authorised Benchmarks Regime (SABR)**, reducing regulatory scope by 80-90% to target only systemically important benchmarks and administrators while easing burdens on industry. This matters for compliance professionals as it shifts from broad regulation of all benchmarks to targeted oversight, requiring firms to reassess benchmark usage, prepare for transition, and adapt to FCA rules on risk management, enhancing UK competitiveness post-FSMA 2023 repeal of assimilated laws. #
What Changed
- - Narrower scope: Regulation limited to benchmarks/administrators designated by HM Treasury (HMT) on FCA advice, based on criteria like systemic impact on UK financial integrity, consumers, or markets; reduces coverage by 80-90%, with no distinction
- FCA-led firm-facing rules: HMT delegates requirements (governance, conflicts, oversight, methodology transparency, record-keeping) to FCA Handbook; removes legislative obligations on users to only use registered benchmarks, replaced by FCA rules/guid
- Overseas benchmarks: Replaces equivalence/endorsement with Overseas Recognition Regime (ORR); designated overseas administrators may avoid dual regulation if ORR-eligible.
- No opt-in: Non-designated benchmarks/administrators unregulated; contributor obligations shift to FCA rules.
- Enhanced FCA powers: Potential extension to intervene/wind-down designated benchmarks and direct firms to restrict usage; may cover non-price data like ESG metrics.
Suggested Considerations
- Review current benchmarks for potential designation risk (systemic impact criteria) and map usage across portfolios.
- Participate in HMT consultation (responses via gov.uk) and prepare for FCA consultation on rules.
- Develop/revise policies for benchmark risk management, including cessation/wind-down plans for regulated/non-regulated benchmarks per future FCA guidance.
- Assess transition from current authorisation (if non-designated, prepare for deregistration); overseas firms evaluate ORR eligibility.
- Update governance/conflicts frameworks for any designated activities; monitor ESG data inclusion in rules.
Key Dates
Compliance Impact
Urgency: High - Significant scope reduction eases burdens but introduces transition risks, new FCA rules, and designation uncertainty; firms must act now on consultation (post-Dec 2025) and prep for 2026 FCA changes to avoid non-compliance during shift, especially with 1 Jan 2026 milestone amplifying competitiveness pressures.
Who is Affected
References
AI-generated analysis. May contain errors or omissions — verify with the original FCA source before acting. Full disclaimer.
Summary
The FCA welcomes the Government’s consultation on a new benchmarks regime for the UK. Since the introduction of the current regulatory framework, the financial landscape has evolved significantly. We now have an opportunity to build a regime that is more targeted to current market conditions and to reduce unnecessary burdens on industry, without compromising high standards. We are working with the Government to reform the current benchmarks regime to ensure that the regulatory framework remai...