Certain of the securities regulatory authorities are proposing changes to Multilateral Instrument 25-102 Designated Benchmarks and Benchmark Administrators to provide for a securities regulatory regime for commodity benchmarks and administrators. MI 25-102, which was published in final form on April 29, for the first time designates and regulates benchmarks and their administrators. Under the rule, Refinitiv Benchmark Services (UK) Limited is the only designated administrator and only CDOR is designated as a benchmark. The proposed amendments would provide for the designation and regulation of commodity benchmarks, including those dually designated as designated critical benchmarks and designated commodity benchmarks, and benchmarks dually designated as designated regulated-data benchmarks and designated commodity benchmarks, as well as their administrators. For example, a “designated commodity benchmark” would be defined as a benchmark that is determined by reference to or an assessment of an underlying interest that is a commodity, but does not include a benchmark that has, as an underlying interest, a currency or a commodity that is intangible. Depending on the designation, administrators would have to comply with a number of requirements, similar to those under the existing rules but modified as needed for the commodity markets. The changes are intended to protect the Canadian commodity markets and also establish an EU equivalent regime to allow EU institutional market participants to use any Canadian designated benchmark under their equivalency provisions. The amendments are generally based on the principles for Oil Price Reporting Agencies published by IOSCO which is used in the EU regulations. There is no current intention to designate any commodity benchmarks or administrators, but the CSA members believe it is important to establish a regime because such benchmarks are subject to vulnerabilities, particularly with respect to the voluntary reporting of input data and low liquidity in physically-settled contracts.
Similar proposals have been published by the OSC to OSC Rule 25-501 (Commodity Futures Act) Designated Benchmarks and Benchmarks Administrators. Comments on both proposals are due July 28.
May 31, 2021