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To bolster oversight of financial benchmarks, regulators should be able to push benchmark administrators to change their methodologies, says the European Securities and Markets Authority (ESMA).

In a submission to the European Commission’s consultation on benchmark regulation, ESMA set out its recommendations for enhanced oversight and transparency of benchmarks.

“Reliable benchmarks are crucial for the referencing and pricing of financial instruments. We have made progress in making the administration and use of benchmarks more robust, however, the transition to the new [benchmark regulation] regime is not yet finalized,” said Steven Maijoor, chair of ESMA, in a statement.

Europe’s new benchmark regulation requires that the administrators of financial benchmarks seek authorization by Dec. 31, 2021. Otherwise, their benchmarks can’t be used in Europe.

The new regime, which is being adopted in the wake of the LIBOR market manipulation scandal, aims to “increase the robustness and reliability of financial benchmarks,” regulators said.

In its response to the consultation, ESMA proposed that regulators be allowed to request an administrator to change its methodology. ESMA also requested clarification on the process for suspending an administrator, and made proposals designed to ensure a level playing field between EU and non-EU benchmarks.

“While the transitional period for critical and third country benchmarks is ongoing, we believe that it is important to provide for a smooth transition…by enhancing the requirements for critical benchmarks and ensuring the right level of oversight for EU and third country benchmarks,” Maijoor said.