2 Min Read
LONDON (Reuters) - A wider than anticipated range of market benchmarks will come under the European Union's regulatory net if a deal brokered among member states on Wednesday wins final approval, EU diplomats said.
New rules were proposed after banks were caught trying to rig hitherto unregulated interest rate and currency market benchmarks.
The proposed law to regulate benchmarks passed a key hurdle on Wednesday, when the 28 EU states agreed to amend how they would decide which benchmarks are "critical" and subject to new supervision, the diplomats said.
The amended text will be put to the bloc's national ambassadors on Feb. 13 for formal approval and then negotiations will start with the European Parliament on a final deal.
The original draft, written by the European Commission, defined critical benchmarks as being linked to investment funds of at least 500 billion euros ($572 billion).
The member states have added two more definitions to ensure that important cross-border or national benchmarks not reaching this threshold don't fall between the supervisory cracks, one of the diplomats said on condition of anonymity.
Benchmarks tracked by at least 400 billion euros, which are used widely and with few or no alternatives, would be deemed critical.
A national supervisor can propose that a smaller benchmark of national importance can be "critical" if the EU's European Securities and Markets Authority agrees.
The law would also give supervisors powers to force banks and others to contribute to a benchmark if the number of submitters fall to levels where confidence in the index is hit.
Reporting by Huw Jones; Editing by Elaine Hardcastle