125390/EU XXIV.GP Eingelangt am 20/09/13 EUROPEAN COMMISSION Brussels, 18.9.2013 SWD(2013) 336 final COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on indices used as benchmarks in financial instruments and financial contracts {COM(2013) 641 final} {SWD(2013) 337 final} EN EN TABLE OF CONTENTS 1. INTRODUCTION ...................................................................................................................................................................1 2. PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES....................................................................................2 2.1. CONSULTATION OF INTERESTED PARTIES ..................................................................................................................................2 2.2. STEERING GROUP...............................................................................................................................................................2 2.3. IMPACT ASSESSMENT BOARD ...............................................................................................................................................3 3. POLICY CONTEXT .................................................................................................................................................................3 3.1. THE CURRENT EU LEGISLATIVE FRAMEWORK ON BENCHMARKS ......................................................................................................3 3.2. NATURE AND SIZE OF THE MARKET CONCERNED .........................................................................................................................4 3.2.1. What are benchmarks and how are they produced? ....................................................................................................... 4 3.2.2. Calculation Methodology ................................................................................................................................................. 5 3.2.3. Benchmark industry size................................................................................................................................................... 6 4. PROBLEM DEFINITION .........................................................................................................................................................6 4.1. PROBLEM 1. RISK OF BENCHMARK MANIPULATION.....................................................................................................................7 4.1.1. The problem drivers.......................................................................................................................................................... 7 4.2. PROBLEM 2: USE OF BENCHMARKS WHICH ARE NOT ROBUST, RELIABLE OR FIT FOR PURPOSE ...............................................................12 4.2.1. The problem drivers........................................................................................................................................................ 12 5. BASELINE SCENARIO – HOW WOULD PROBLEMS EVOLVE WITHOUT EU ACTION? ...............................................................15 6. SUBSIDIARITY AND PROPORTIONALITY..............................................................................................................................17 7. THE SCOPE OF THE INITIATIVE............................................................................................................................................18 7.1 DEFINING THE SCOPE BY BENCHMARK CHARACTERISTICS .............................................................................................................19 7.1.1. Scoping for the main problem drivers: discretion and conflicts of interest.................................................................... 19 7.1.2. Scoping for impact and vulnerability: published indices ................................................................................................ 19 7.1.3. Scoping for impact and vulnerability: ‘financial’ benchmarks........................................................................................ 19 7.1.4.Scoping: targeting critical or important benchmarks ..................................................................................................... 20 7.2. DEFINING THE SCOPE BY ACTORS..........................................................................................................................................20 7.2.1. Entities producing benchmarks ...................................................................................................................................... 20 7.2.2. Entities contributing to benchmarks .............................................................................................................................. 21 7.2.3 Users................................................................................................................................................................................ 22 8. OBJECTIVES .......................................................................................................................................................................22 8.1. GENERAL, SPECIFIC AND OPERATIONAL OBJECTIVES...................................................................................................................22 8.2. CONSISTENCY OF THE OBJECTIVES WITH OTHER EU POLICIES........................................................................................................22 9. ANALYSIS OF POLICY OPTIONS, IMPACT AND COMPARISON...............................................................................................22 9.1. LIMIT INCENTIVES FOR MANIPULATION ..................................................................................................................................22 9.1.1. Option 1 No action ......................................................................................................................................................... 23 9.1.2. Option 2 Manage and disclose conflicts of interest ....................................................................................................... 23 9.1.3. Option 3 Structural Separation....................................................................................................................................... 23 9.1.4. The preferred options..................................................................................................................................................... 24 9.2. MINIMISE DISCRETION - ENSURE BENCHMARKS ARE BASED ON SUFFICIENT, RELIABLE & REPRESENTATIVE DATA ........................................25 9.2.1. Option 1 No action ......................................................................................................................................................... 25 9.2.2. Option 2 Require the use of transaction data if available and reliable, otherwise well founded and verifiable discretion ................................................................................................................................................................................................. 25 9.2.3. Option 3 Mandatory use of transaction data only......................................................................................................... 26 9.2.4. Option 4 Mandate contributions.................................................................................................................................... 27 9.2.5. The preferred options..................................................................................................................................................... 28 9.3. POLICY OPTIONS TO ENSURE INTERNAL GOVERNANCE AND CONTROLS ADDRESS RISKS ........................................................................29 9.3.1. Option 1 No action ......................................................................................................................................................... 30 9.3.2. Option 2 Authorities to issue comply or explain guidelines............................................................................................ 30 9.3.3. Option 3 Mandate adequate management systems and effective controls .................................................................. 31 9.3.4. The preferred options..................................................................................................................................................... 31 9.4. ENHANCE TRANSPARENCY AND ENSURE THE USE OF ROBUST AND RELIABLE BENCHMARKS...................................................................33 9.4.1. Option 1 No action ......................................................................................................................................................... 33 9.4.2. Option 2 Require transparency on methodology, underlying data process and purpose whilst allowing for delayed or partial transparency of underlying data when justified........................................................................................................... 33 9.4.3. Option 3: Assessment of suitability of benchmarks’ use for certain retail contracts ..................................................... 34 9.4.4. Option 4: Mandatory notification of benchmarks’ use .................................................................................................. 35 9.4.5. The preferred