Staying compliant with “Benchmarks Regulation” or “BMR”

Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (“Benchmarks Regulation” or “BMR”) establishes a common regulatory framework at the EU level under which benchmarks are provided, produced and used. The BMR seeks to ensure the accuracy, robustness and integrity of benchmarks in order to restore trust in benchmarks and in financial markets following the LIBOR and EURIBOR manipulation scandals. In particular, the BMR (i) restricts the use of unauthorised benchmarks by “supervised entities” (including UCITS, UCITS management companies and AIFMs), (ii) requires benchmark administrators to become authorised or registered and (iii) imposes certain obligations on benchmark contributors.

On 30 October 2017, the CSSF published a press release reminding that the Benchmarks Regulation will be applicable as of 1 January 2018. Where the prospectus of a UCITS fund references a benchmark, the prospectus should include clear information on whether the benchmark is provided by an administrator registered with ESMA. This disclosure must be included in the prospectus of new UCITS authorised on or after 1 January 2018. Existing UCITS must incorporate such disclosure the next time they are updating their prospectuses, no later than 1 January 2019.

On 4 August 2017, bill of law 7164 implementing the BMR was submitted to the Luxembourg Parliament. The bill designates the CSSF and the CAA as the competent authorities ensuring that benchmark administrators and supervised entities comply with the BMR.