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GFMA provides comments to the European Union (EU) on EU’s legislative proposal for the regulation of benchmarks (the Regulation).
While GFMA considers that benchmark innovation, production and distribution should remain industry-driven activities, GFMA believes that internationally-agreed best practice standards, supported by appropriate regional or local regulation, are critical to promoting both investor confidence and the integrity of global financial markets.
GFMA shares concerns that the proposed Regulation could better embody the concept of proportionality imbedded in the International Organization of Securities Commissions (IOSCO) Principles. GFMA believes that the provisions of the Regulation should apply commensurately with the risks posed by a benchmark to the financial system and with the importance of a benchmark to market participants, investors and consumers. In addition, GFMA notes that the equivalence regime approach for non-EU benchmarks, limited proposed exemptions, and demanding timelines, may need to be modified to reflect market practicalities and risks. A pragmatic approach to implementation is necessary in order to avoid confusion, uncertainty and volatility in markets, which would adversely impact EU institutions and consumers.