Benchmarks have a substantial influence on a broad range of financial instruments, financial contracts and investment funds. They therefore play a significant role for our financial system.
Benchmark Regulation
Regulation (EU) 2016/1011 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014, was published in the Official Journal of the European Union on 29 June 2016 and has been directly applicable since 1 January 2018. The Benchmark Regulation has created a uniform European framework for financial benchmarks following the fallout of the London Interbank Offered Rate (LIBOR) and Euro Interbank Offered Rate (EURIBOR) manipulation scandals. In its original version it was intended to ensure that all benchmarks that were provided and applied are robust, reliable, representative and suitable for their intended usage, and thereby contribute to a smoothly functioning EU internal market with a high level of consumer and investor protection.
In addition to this EU Regulation, supplementary measures were created in Austria by means of the Benchmarking Enforcement Act (RW-VG; Referenzwerte-Vollzugsgesetz) that are necessary for the implementation of the European Regulation. Notably, the Austrian Financial Market Authority (FMA) was named as the competent supervisory authority. Licensing and registration applications are therefore accordingly to be submitted to the FMA. Furthermore administrative measures and sanctions were also determined.
In recent years, there have been several amendments to the Benchmark Regulation:
The scope of the Benchmark Regulation was extended in 2019 for implementing the European Commission’s Action Plan on Financing Sustainable Growth to include transparency obligations in relation to sustainability and sustainable benchmark categories.
In 2021, the Regulation was amended again, with the legal determination of substitute benchmarks being defined in the event of a systemically important benchmark for the EU being discontinued.
The most far-reaching amendment for the regulation of benchmarks occurred in Regulation (EU) 2025/914 of the European Parliament and of the Council of 7 May 2025 amending the Benchmark Regulation: the Benchmark Regulation’s scope was reduced substantially. With effect from 1 January 2026, the scope of application of the Benchmark Regulation now only covers systemically relevant (critical and significant) benchmarks, EU Climate Transition Benchmarks (CTBs), EU Paris-aligned Benchmarks (PABs), as well as certain commodity benchmarks. From this date onwards, all other financial benchmarks cease to be covered by the Benchmark Regulation.
Definitions and Categories of Benchmarks
Index: an index is number that is published or made publicly accessible and which it regularly defined by means of the application of a formula or a valuation. The basis for the index is the value of one or more underlying assets, which are not necessarily financial information, but which may also be non-financial values such as weather information or sports results.
Benchmark: a benchmark is an index that is applied for the pricing of financial instruments or financial contracts or for measuring the performance of an investment fund. Consequently every benchmark is an index, but every index is not a benchmark.
It is necessary to differentiate between the following benchmark categories:
Critical benchmarks may be financial instruments and contracts with an average value of at least EUR 500 billion, and which therefore influence the stability of the financial markets in the European Union. A benchmark may also be categorised as critical, in the case that the aforementioned average value is only EUR 400 billion and where in setting the benchmark there is no other suitable alternative or where such an alternative is only suited to a very small number of cases, and so doing would have material detrimental effects on the integrity and stability of the markets. A couple of examples of critical benchmarks, that have been declared as such by means of an EU Regulation, are the EURIBOR (Euro Interbank Offered Rate) and the EONIA (Euro Overnight Index Average).
Compared to critical benchmarks, significant benchmarks shall as a reference for financial instruments or financial contracts with a total average value of at least EUR 50 billion. A benchmark may also be classified as significant, if there are no or very few appropriate market-led substitutes, where in the event that the benchmark ceases to be provided there would be a significant and adverse impact on market integrity, financial stability, consumers, the real economy or the financing of households or businesses in a Member States.
EU Climate Transition Benchmarks (CTBs) and Paris-aligned Benchmarks (PABs) have the objective of aligning their investment universe to the objectives of the Paris Climate Agreement and pushing investments in sustainable projects and assets, but differ in terms of the level of their demands.
CTBs concentrate on pathways to decarbonisation and demand a reduction by at least 30 % in CO2 intensity of the entities in which investments are made compared to the market as a whole and an annual decarbonisation rate of 7 %.
In contrast, PABs concentrate specially on the Paris Climate Agreement’s temperature objectives and require a more ambitious reduction of CO2 intensity by 50% compared with the market as a whole, as well as an annual decarbonisation rate of 7 %.
Commodity benchmarks fall within the application criteria of the Benchmark Regulation, which are based on the contributed data from undertakings, the majority of which are unsupervised, and which have a reference basis of more than EUR 200 million.
Addressees for the Benchmarks Regulation
The Benchmark Regulation distinguishes between the following addressees and defines varying degrees of conduct regulations for different addressees. From 1 January 2026 these shall however only still apply to the restricted scope of benchmarks described above.
The administrator is a natural or legal person exercising control over the provision of the benchmark. Based on the administrator’s position in the process or drawing up a benchmark, the administrator is the main addressee of the Benchmark Regulation.
The provision of the benchmark in particular includes the administration of the mechanisms for the determination of the benchmark, the collection, analysis and processing of input data as well as the calculation of the benchmark.
The contributor is a natural or legal person that submits input data to the administrator that are otherwise not readily available. Conduct rules are also applied to the contributor to a larger extent, provided that the contributor is a supervised entity.
Users are supervised entities that use benchmarks by issuing financial instruments or as contractual parties to financial contracts, or for measuring the performance of investment funds, for which an index or a combination of indices form the reference. Examples include, among others, CRR-credit institutions, insurance undertakings, investment firms, UCITS management companies, alternative investment fund managers as well as the lenders in the case of consumer credit agreements.
In relation to a financial instrument or a financial contract, users use benchmarks in order to determine the amount payable in relation to an index or a combination of indices. Benchmarks are also used to measure the composition or a portfolio, the performance of an investment fund or for calculating performance fees based on an index or a combination of indices.
Conduct obligations also apply to users of benchmarks, especially in relation to transparency and the drawing up of contingency plans.
Authorisation Process
A natural or legal person based within the European Union intending to be active as an administrator, is required to submit an application for a licence or for a registration with its competent authority.
The assessment of whether a natural or legal person based in the European Union that wishes to be active as an administrator requires a licence, shall on the one hand be based on the classification of the benchmarks that it provides, while on the other hand also taking into account whether or not the administrator is a supervised entity as defined in the Benchmark Regulation.
A registration shall be required, when the administrator is an entity that is already subject to supervision, that provides or wishes to provide indices, that are used or are intended to be used as significant benchmarks, as EU Climate Transition Benchmarks or as EU Paris-aligned Benchmarks, provided that the activity of providing a benchmark is not impeded by the applicable sector-specific regulations for the supervised entity, and where none of the indices provided would constitute a critical benchmark.
Further information:
Contact
Applications and enquiries should be addressed using the e-mail address provided below.
Austrian Financial Market Authority (FMA)
Division III/3 – Asset Management
Otto-Wagner-Platz 5
1090 Vienna
[email protected]