Allegations and cases of benchmark manipulation which came to light across the globe in the late 2000s and during the 2010s resulted in enforcement action against firms and individuals and caused a number of governments and regulatory bodies to implement changes to the way benchmarks are set and administered. Globally, to improve benchmark integrity and to address declining liquidity in key interbank unsecured funding markets, there has been a move away from the use of interbank offered rates set by panel contributors, towards 'risk-free' rates based on market transactions (discussed further in our Topic Guide, IBOR transition and risk-free rates).

International: At the international level the International Organization of Securities Commissions (IOSCO) published Principles for Oil Price Reporting Agencies in December 2012 and its Final Report on Principles for Financial Benchmarks in July 2013, shortly after the Financial Stability Board established the Official Sector Steering Group of regulators and central banks to coordinate consistency of review of existing interest rate benchmarks. 

EU Benchmarks Regulation: At an EU level, on 1 January 2018, the EU Regulation on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (Regulation (EU) 2016/1011) entered into full application, subject to certain transitional arrangements. The stated overall objective of the EU Regulation is to help restore confidence in the integrity of benchmarks by enhancing the robustness and reliability of benchmarks, facilitating the prevention and detection of their manipulation and clarifying responsibility for and the supervision of benchmarks by the authorities. It regulates the administration of, contribution to and use of a broad range of indices and replaces corresponding benchmark regulatory regimes previously in place in member states. Amendments to the EU Benchmarks Regulation were made in 2021 to address challenges with amending tough legacy contracts for IBOR transition purposes.

For background on the EU Benchmarks Regulation see our Client Briefing The new EU Benchmarks Regulation: What you need to know (September 2016).​ ESMA took over the supervision of critical benchmark administrators from 1 January 2022, under amendments introduced by Regulation (EU) 2019/2175​. ​More recently, the European Commission completed a review of the functioning of the EU Benchmarks Regulation and in October 2023 published a legislative proposal with targeted amendments as part of its 2024 work programme. The legislative proposal (EU BMR Review Proposal) is progressing through the EU legislative process.

See EU Benchmarks Regulation section below for more information.

United Kingdom: On the UK's withdrawal from the EU, the UK onshored the EU Benchmarks Regulation (as the UK Benchmarks Regulation) and implemented certain of its requirements through secondary legislation and regulatory rules. The Financ​ial Services Act 2021 ​gave the Financial Conduct Authority (FCA) more powers to manage an orderly wind-down of critical benchmarks such as LIBOR. The Critical Benchmarks (References and Administrators' Liability) Act 2021 was enacted to support the effective operation of the powers granted to the FCA under the Financial Services Act 2021. As part of the UK's post-Brexit regulatory reform programme, designed to deliver a 'Smarter Regulatory Framework' for the UK, the UK Government intends to repeal retained EU law (from 1 January 2024, known as "assimilated" law) including the UK Benchmarks Regulation (UK BMR), and replace its provisions with regulatory rules. Following its approach to revocation and reform in 'Tranches' of legislation, the government prioritised work on Tranches 1 and 2 in 2023. The government has included the UK BMR in 'Tranche 3', and expressed the intention of reviewing and consulting on potential reforms to it in 2024. This timing may be impacted by the outcome of the UK general election in July 2024.

National: Outside the EU, jurisdictions have taken different approaches to the regulation of benchmarks. Some jurisdictions like Australia, Singapore, Japan and Korea ​have adopted regulatory reforms that target a few, specifically designated benchmarks. Others, like the USA, have preferred to achieve the objectives of the IOSCO Principles through more robust enforcement rather than new supervisory architecture.