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Financial benchmark and regulatory guide released

Wednesday 13 June 2018



Regulations


Following a year-long consultation period, the corporate regulator has released its financial benchmarks and regulatory guide.

“This is another significant step in ensuring continued market confidence in Australian financial benchmarks, so that they remain robust and reliable. The public can be confident that these critical benchmarks will be subject to the highest international standards of oversight,” said Australian Securities and Investment Commission (ASIC) Commissioner Cathie Armour.

The regulatory guide, RG 268 Licensing Regime for Financial Benchmarks Administrators, now puts Australian benchmark rules in-line with the 2013 principles set out by the international securities regulator, the International Organisation of Securities Commission (IOSCO).

The regulatory guide indicated that these principles were reached “…in response to regulatory concerns about the integrity and reliability of financial benchmarks, and the potential impact on market integrity and investor confidence.”
 
The regulatory guide made reference to Report 440 Financial Benchmarks, published in 2015, that addressed the importance of benchmarks and why they need to be ‘robust’.
 
The next stage took place in 2016, when the Council of Financial Regulators (CFR) recommended the licensing of administrators of significant benchmarks. The writing of the necessary rules was supported by ASIC. The regulator also provided support to establish these obligations.

The Treasury Laws Amendment (2017 Measures No.5) Act 2018 established licensing, rule-making and supervision of the benchmarks specified in licensing.

“This follows the implementation of new BBSW methodology, with the benchmark now calculated directly from market transactions during a longer rate-set window and involving a larger number of participants,” ASIC said, in their official statement.