Benchmark Regulation (BMR) - Financial definition
Country
: European Union
Concise definition of the term Benchmark Regulation
The Benchmark Regulation (BMR) is a European Union regulation that sets out rules for the provision, use, and governance of benchmarks used in financial instruments and contracts. Its primary aim is to ensure the accuracy, robustness, and integrity of financial benchmarks to prevent manipulation and enhance market transparency.
Comprehensive definition of the term Benchmark Regulation
The Benchmark Regulation (BMR) was introduced in response to benchmark manipulation scandals, such as the LIBOR and EURIBOR incidents, which highlighted the need for stricter oversight and reliability of benchmarks. BMR applies to a wide range of benchmarks, including interest rates, commodity prices, and indices. It mandates that administrators of benchmarks be authorized and supervised by competent authorities, and it requires contributors to follow a code of conduct.
The regulation also imposes obligations on users to ensure benchmarks are fit for their intended purposes. Practical examples include the transition from LIBOR to alternative risk-free rates (RFRs) and the increased scrutiny on indices used in investment funds to ensure they reflect true market conditions.