On 24 December 2019, the CSSF published a communiqué (the "Communication") regarding Regulation (EU) 2016/1011 on indices used as benchmarks (the "Benchmark Regulation") addressed to all entities which are subject to the CSSF’s supervision and which are using benchmarks (the "Concerned Entities").
Extension of transitional provisions
The CSSF draws attention to the fact that the transitional provisions provided for in article 51 of the Benchmark Regulation concerning the use of benchmarks provided by third country administrators and benchmarks declared as critical by the European Commission have been extended until 31 December 2021.
Fall-back provisions
The CSSF reminds that the Concerned Entities are expected to set up fall-back provisions in the event a benchmark materially changes or ceases to be provided pursuant to article 28(2) of the Benchmark Regulation. In that respect, the Concerned Entitiess are expected to be prepared for the EONIA and the LIBOR rates to cease to operate around the turn of 2021 and 2022. To stay up to date, the Concerned Entities should regularly monitor developments and actions of the European working groups established in this respect and consider their recommendations on an ongoing basis. The most recent information can be found on the website of the European Central Bank or the Bank of England.
Disclosures in prospectuses of transferable securities products
According to article 29(2) of the Benchmark Regulation in case the object of a prospectus to be published under the Prospectus Directive ((EU) 2017/1129) or the UCITS Directive (2009/65/EC) is transferable securities or other investment products that reference a benchmark, the prospectus must include information on whether the benchmark is provided by an administrator included in the ESMA register of benchmark administrators and third country benchmarks (the "ESMA Register").
List of permitted benchmarks
The Communication also provides a detailed list of benchmarks which the Concerned Entities may use as of 1 January 2020:
- an index exempted from the scope of application of the Benchmark Regulation (art. 2(2) of the Benchmark Regulation);
- a benchmark included in the ESMA Register;
- a benchmark that is provided by an administrator located in a third country (which can be used until 31 December 2021 without listing in the ESMA Register);
- a benchmark provided by an administrator located in a third country, where the benchmark was used in the European Union on or before 31 December 2021 as a reference for financial instruments, financial contracts, or for measuring the performance of an investment fund but only for such financial instruments, financial contracts and measurements of the performance of an investment fund that already reference the benchmark in the European Union or which add reference to such benchmark prior to 31 December 2021;
- a benchmark declared to be critical by the European Commission;
- a benchmark that is provided by an index provider who has applied for the authorisation or registration by 1 January 2020;
- a benchmark that is not compliant with the Benchmark Regulation, where its use is permitted by a national competent authority of a Member State of the European Union and provided that the requirements of article 51(4) of the Benchmark Regulation are met.