Overview

This bill clarifies how references to "Article 23A benchmarks" (key financial indicators) are interpreted in contracts and protects administrators of these benchmarks from certain legal liabilities. 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 automatically include the benchmark as it existed at various times, even if its market representation changed. This includes situations where the Financial Conduct Authority (FCA) has intervened. It also clarifies that this applies to all past and present contracts regardless of how the benchmark is described. The bill includes provisions to prevent the creation of new liabilities related to past actions and ensures that existing legal claims are not extinguished. However, it allows for exceptions where contracts specifically exclude these provisions or use fallback mechanisms.

Liability of Administrators of Article 23A Benchmarks

The bill limits the liability of administrators of Article 23A benchmarks and their employees for actions taken in response to FCA directions or for publishing the benchmark as modified by the FCA. However, it does not remove liability for actions resulting from their own discretionary decisions.

Government Spending

The bill is not expected to have a significant direct impact on UK government spending. The costs associated with its implementation will likely be absorbed by existing regulatory bodies and industry participants. No specific figures are provided in the bill text.

Groups Affected

• Financial institutions: The clarification on benchmark references will affect how contracts are interpreted, potentially impacting financial products and derivatives.
• Benchmark administrators: This bill offers them protection from liability in certain circumstances, reducing their legal risk.
• The Financial Conduct Authority (FCA): The FCA's regulatory powers relating to benchmarks are reinforced.
• Contracting parties: The impact on individual contracting parties will depend on the specific terms of their agreements and the nature of the benchmarks involved.

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