In Policy Statement 15/6: Bringing additional benchmarks into the regulatory and supervisory regime the FCA noted that some respondents to its earlier Consultation Paper had raised concerns regarding the unconstrained ability of administrators to set the prices of benchmarks. In its response, the FCA stated that it would consider whether additions to the rules in chapter 8 of the Market Conduct Sourcebook (MAR 8) were necessary.
The FCA has considered the issue further and has decided that additional rules are necessary. It has now published Consultation Paper 15/18: Fair, reasonable and non-discriminatory access to regulated benchmarks (CP15/18). In CP15/18 the FCA sets out proposals for fair, reasonable and non-discriminatory (FRAND) access to regulated benchmarks by benchmark administrators. The new requirements would be set out in MAR 8, specifically MAR 8.3.
The proposed FRAND rules and guidance will apply to existing and future pricing and licensing arrangements. They will not apply retrospectively, that is, the FCA will not be requiring adjustment to fees already paid. The FCA also states that the FRAND proposals are in line with the Markets in Financial Instruments Regulation which will introduce FRAND requirements for benchmark provision in 2019. The FRAND rules and guidance will be applicable to all users and potential users of the eight regulated benchmarks.
While the FCA is setting out FRAND rules and related guidance, it states that it will not approve benchmark administrators’ pricing structures in advance. Neither will it provide individual guidance that may effectively be regarded as FCA ‘sign-off’ on pricing structures. The FCA states that benchmark administrators will be expected to comply with the letter and the spirit of the FRAND rules and related guidance by themselves, ensuring their pricing structures satisfy the provisions of the rules and the accompanying guidance.
The deadline for comments on CP15/18 is 3 August 2015. The FCA expects to publish its Policy Statement and final Handbook text by Q4 2015.