FTSE Russell authorized as an EU benchmark administrator

Jun 5th, 2018 | By | Category: ETF and Index News

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FTSE Russell, a subsidiary of London Stock Exchange Group, has received regulatory approval from the UK’s Financial Conduct Authority (FCA) to be authorized as a benchmark administrator under the European Union’s Benchmark Regulation (EU BMR).

Mark Makepeace, CEO of FTSE Russell.

Mark Makepeace, CEO of FTSE Russell.

The regulation, which has been in effect since 1 January 2018, forms part of the EU’s drive to enhance the reliability and integrity of financial benchmarks following the LIBOR scandal in 2012.

It offers a harmonized framework for index providers, thereby providing investors in index-linked products, such as ETFs, with a greater degree of confidence that these indices will not be subject to manipulation.

Both EU and non-EU entities that administer financial benchmarks used in the EU are required to apply for a license under the EU BMR before 1 January 2020.

Following the approval of FTSE Russell as a benchmark administrator, the firm’s indices will now be included in the Benchmarks Register compiled by the European Securities and Markets Authority (ESMA).

The authorization is comprehensive across the FTSE, Russell, FTSE TMX and FTSE MTS equity and fixed income indices that are used as benchmarks in the European Union.

The fixed income indices acquired from Citigroup in August 2017 will continue to be administered by the US-based entity, FTSE Fixed Income, according to the EU Benchmarks Regulation’s third country transitional provisions.

The process of the transition to FTSE Russell as the administrator is being managed in conjunction with bringing Citi’s fixed income indices under the FTSE Russell brand.

Mark Makepeace, CEO of FTSE Russell, commented, “We are committed to promoting the highest possible governance standards within our industry. As such, we fully embrace the principles within the European Benchmarks Regulation to enhance and promote transparency and openness in all benchmark decisions. We will continue to work closely with our clients to support them in implementing the regulation.”

FTSE Russell becomes the second major index provider to the ETF industry to receive benchmark administrator status, following the authorization of MSCI earlier in the year.

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