UK FCA Benchmark Administrator SMR
On Nov. 29, FCA proposed applying SMR to benchmark administrator.
- Consulted on how to extend senior managers regime to benchmark administrators.
- Senior managers regime (SMR) will apply to most FCA-regulated firms from Dec. 2019.
- As benchmark administrators are a new category of authorized firms they have been granted a one-year extension from the wider roll out of the SMR, see #62493.
- The new rules will come into force for benchmark administrators on Dec. 7, 2020.
- Benchmark Administrators
- Consultation sets out how FCA propose to apply the senior managers regime to benchmark administrators that do not undertake any other regulated activities.
- Propose that all benchmark administrators are automatically classified as core firms.
- This classification means that they will have to apply up to 4 senior manager functions (SMFs) and allocate 2 prescribed responsibilities to the relevant senior managers.
- Recognizing that benchmark administrators vary in size and complexity, allow these to use existing waiver process to apply for limited scope categorization if appropriate.
- Only 1 type of SMF, limited scope function, will apply to firm which has such waiver.
- Limited Scope firms will not be required to implement any prescribed responsibilities.
- FCA is not proposing to apply the certification regime to benchmark administrators.
- For core and limited scope firms, conduct rules will apply to almost all employees.
- This approach should increase awareness of conduct issues across firms.
- Commodity Benchmark Administrators
- Proposing to tailor the conduct rules for certain commodity benchmark administrators.
- E.g. those that are subject to Annex II of the Benchmarks Regulation (Annex II firms).
- Most of conduct rules will only apply to a firm's regulated financial services activities.
- This includes the rules on disclosure to regulators, in line with how FCA Principles for Business (PRIN) apply to these firms and reflect their specific treatment under BMR.
- Approved Persons Regime
- After Dec. 9, 2019, the existing approved persons regime (APR) will no longer apply to firms authorized under FSMA, and will only apply to appointed representatives.
- Consultation proposes some consequential changes to FCA rules to make this clear.
- Outcomes Sought
- Benchmark administrators play an important role in financial markets, it is important these administrators have healthy cultures and high standards of personal conduct.
- Proposals seek to ensure appropriate accountability for senior managers at such firms.
- Should encourage, empower senior managers to ensure healthy firm cultures by being more precise about individual responsibilities, strengthening governance structures.
- This should in turn improve decision-making and make it easier to identify misconduct.
- Conduct rules which introduce basic standards for how employees should behave.
- E.g. acting with due skill, care/diligence, observing proper standard of market conduct.
- Applying these rules widely to most employees in financial services firms should improve individual accountability and increase awareness of conduct issues.
- Open for comment to Feb. 28, 2020, FCA aiming to finalize approach by Q3 2020.
- Until new rules come into force in Dec. 2020, APR will still apply in full to benchmark administrators, FCA will continue to process applications for controlled functions.
||B/D; Bank; Depo; Exch; Fiduciary; IA
||CP CP19/31, PR 11/29/2019; BMR Reg 2016/1011; SMR
||Compliance; C-Suite; HR; Legal; Operations; Registration; Reporting
||Banking; Clearing; Commodities; Corporate; Derivatives; Fixed Income; Loan; Mortgage; Repo/Reverse; Securities
|Reg. Last Update
Last substantive update on 11/29/2019