EU wholesale markets – EU Council adopts proposed EU Benchmarks Regulation amendments

Background 

On 24 March 2025, the Council of the EU published a press release confirming that it has adopted a regulation amending the EU Benchmarks Regulation (Regulation (EU) 2016/11) (“Benchmarks Regulation” or “BMR”). The amendments relate primarily to: reducing the population of benchmarks within scope of the BMR; introducing a new spot FX-related exemption regime; making the EU Climate Transition Benchmark and EU Paris-aligned Benchmarks requirements less onerous for significant benchmark administrators; and simplifying regulatory notification requirements. The Council’s announcement ultimately follows on from the European Commission’s proposed amendments to the Benchmarks Regulation published in October 2023, which aimed to narrow the population of benchmarks within scope of the BMR, and to simplify the requirements for those benchmarks that are in scope. 

Key provisions 

The key points stemming from the new regulation adopted by the EU Council include the following: 

• The new regulation will substantially reduce the number of benchmarks in scope of the BMR by removing those benchmarks categorised as non-significant, leaving only critical and significant benchmarks within the scope of the Benchmarks Regulation. 
• The new regulation will revise the EU Climate Transition and Paris-aligned Benchmark provisions by: 
  • removing administrators of benchmarks categorised as non-significant benchmarks under the Benchmarks Regulation (but continuing to permit such administrators to “opt-in” to the BMR on a voluntary basis in certain circumstances); and 
  • requiring administrators of these benchmarks to be authorised, registered, recognised or endorsed (as applicable) to ensure that they are subject to appropriate EU oversight. 
• The new regulation features a specific exemption mechanism for spot foreign exchange benchmarks. This amendment is designed to ensure that EU users will continue to be able to access hedging instruments that are based on spot FX benchmarks. Exempted spot FX benchmarks will ultimately be published in a list to be maintained by the Commission. The proposed regulation sets out the criteria that a spot FX benchmark must meet in order to be able to benefit from an exemption, including where the benchmark: 
  • references a spot exchange rate of a third country currency that is subject to currency controls; and 
  • is used on a frequent, systematic and regular basis to hedge against FX movements, or where it does not have an equivalent alternative provided by an EU administrator. 
• The new regulation aims to align the treatment of third country administered benchmarks with the requirements that apply to EU benchmarks. Going forward, only administrators of critical and significant third country benchmarks would be required to seek recognition or endorsement (in the absence of equivalence). ESMA will, however, be able to designate a third country benchmark in certain circumstances, where it is not categorised as critical or significant. These circumstances include situations where: 
  • the benchmark has no, or very few, market substitutes; or 
  • cessation of the benchmark, or situations where the benchmark is no longer representative of the relevant market, and which would have a significant and adverse impact on market integrity, financial stability, consumers, the real economy or the financing of households and businesses in one or more EU member state. 

ESMA will be given extended powers under the amended BMR, including being permitted to issue warnings regarding significant benchmarks that do not comply with applicable requirements. The implications of such warnings are significant, including supervised entities being prohibited from adding new references to such relevant benchmarks, and being required to replace the benchmark with an alternative for any final contractual benchmark references / calculations. 

Milestones 

Before the regulation can be published in the Official Journal and subsequently take effect, it must be adopted by the European Parliament. The procedure file sets the indicative date for the second reading plenary sitting as 6 May 2025. 

As things stand, the amending regulation is proposed to enter into force on, and to apply from, 1 January 2026. 

Authored by Keti Tano, Dominic Hill, and Michael Thomas.