Overview

This bill clarifies how references to "Article 23A benchmarks" (key financial indicators) are interpreted in contracts and protects benchmark administrators from liability in certain situations. It amends the Benchmarks Regulation (EU) 2016/1011 to achieve this.

Description

The bill makes two key changes to the Benchmarks Regulation:

References to Article 23A Benchmarks

It clarifies that references to Article 23A benchmarks in contracts and agreements must include the benchmark as it exists at all times, even when the Financial Conduct Authority (FCA) intervenes or the administrator exercises discretion. This applies regardless of the benchmark's accuracy to the market. Existing contracts are treated as though they always contained this interpretation. However, this does not create new liability regarding actions or omissions before the benchmark's designation as an Article 23A benchmark. The bill also allows for exceptions (fallback provisions) and Treasury oversight through regulations.

Liability of Administrators

It protects Article 23A benchmark administrators, their officers, and employees from liability for actions taken under instructions from the FCA, or for publishing benchmarks resulting from such actions. However, this protection doesn't cover liability stemming from the administrators’ own discretionary decisions.

Government Spending

The bill does not directly involve government spending. The impact is regulatory, clarifying existing legal frameworks and potentially reducing future litigation costs associated with benchmark disputes.

Groups Affected

• Financial institutions: This bill affects how they interpret and manage contracts referencing financial benchmarks.
• Benchmark administrators: This bill provides legal protection from certain types of liability.
• The FCA: The bill clarifies their powers regarding the regulation of benchmarks.
• Businesses using benchmarks: This bill helps businesses understand their contractual obligations surrounding the use of benchmarks.
• Legal professionals: This bill will necessitate an understanding of its implications in contract law.

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