EU parliament sets benchmarks regulation position

OREANDA-NEWS. The European Parliament's economic and monetary (Econ) committee today adopted a formal report on a draft benchmark regulation.

Econ committee members voted overwhelmingly in favour of the set of compromise amendments prepared by the lead negotiators. The final vote on the amended text was 43 in favour, 10 against and three abstentions.

The commission's original September 2013 proposal would set binding rules for the use and provision of financial benchmarks such as Euribor and Libor, as well as commodity indexes used as benchmarks in financial instruments, such as those used to settle Brent crude futures and other energy derivatives contracts.

The commission's original regulation proposed different rules for "critical" benchmarks such as Libor and other benchmarks deemed to be "non-critical". The issue of how to define which benchmarks fit into each category has been hotly debated.

As far as commodity benchmarks are concerned, "none of them are critical", lead draftswoman Cora van Nieuwenhuizen said. Regulatory requirements for commodity benchmark providers "are not very different from what they have to do now", van Nieuwenhuizen said.

The four main energy benchmark media companies have been implementing international regulatory group Iosco's principles for oil price reporting agencies (the PRA Principles) for over two years, extending them from oil benchmarks to other commodities. Iosco published the PRA Principles in October 2012.

But an annex in the commission's original proposal modelled on the Iosco PRA Principles was removed by parliament in today's vote.

The committee voted to limit the regulatory burden on non-critical benchmarks, with many measures non-binding. Members added qualitative criteria to the definition, allowing national regulators to add to the list of critical benchmarks, a key demand by UK conservatives.

Following the Econ committee vote, negotiators for the parliament and EU member states will have to reach agreement on a final version of the regulation. Given the importance of the new rules, parliament will first have to adopt a negotiating mandate in a plenary vote before inter-institutional talks can start.

Van Nieuwenhuizen said the plenary vote is essentially a formality and expects little change to the Econ version, but UK conservative Kay Swinburne offered a diverging view, insisting that "negotiations in parliament are not over yet" and "we go back to the drawing table".

Swinburne joined a number of parliamentarians in regretting the large number of last-minute oral amendments made today, after a cross-party compromise seemed to have been reached on written clauses.

EU member states adopted their own common position in February. Van Nieuwenhuizen said the plenary vote is foreseen in May or June, with an agreement on final negotiations as early as the autumn.

Argus competes with other media organisations such as Platts in publishing market reports, news and other information on energy markets, including price assessments, some of which fall under the commission's proposed definition of a benchmark.