ESMA_QA_736

Status: ✅ Answer Published

Link to ESMA Q&A tool: https://www.esma.europa.eu/publications-data/questions-answers/736

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Regulatory Context

Regulation : BMR

Level 1 Regulation: Benchmarks Regulation (BMR) - Regulation 2016/1011

Level 2 Regulation: No information available

Level 3 Regulation: No information available

Topic: Benchmarks Regulation

Subject Matter: Use of benchmarks: bilateral agreement on exchanged collateral (ESMA70-145-114_Q&A 5.11)

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Question

Submission Date: 30 March 2023

Does the reference to an index in a bilateral agreement on the interest to be paid on exchanged collateral under various OTC derivatives amount to “use of a benchmark”?

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ESMA Answer

Answer Date: 07-11-2018

No. According to Article 3(1)(7)(b) BMR “use of a benchmark” can be the determination of the amount payable under a financial instrument or a financial contract by referencing an index or a combination of indices. Counterparties often exchange collateral under a bilateral agreement for a variety of OTC derivatives (some of which may be “financial instruments” as specified by Article 3(1)(16) BMR). ESMA considers that the calculation of interest to be paid on these exchanged collateral is not equal to the determination of the amount payable under a financial instrument and therefore does not amount to “use of a benchmark”.

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This document was automatically extracted from the ESMA EMIR Q&A database.