Britain to overhaul benchmark rules to cut industry burden

LONDON, Dec 17 (Reuters) - Britain plans to overhaul broad rules governing financial benchmarks to ease industry's compliance burden and focus regulation only on benchmarks that pose significant risks to the financial system, the finance ministry said on Wednesday.

Industries such as commodity trading, foreign exchange, bond issuance and derivatives clearing rely on a wide range of benchmarks to help allocate capital and risk across the economy.

The FTSE 100 index, for example, tracks the largest listed companies on the London Stock Exchange LSEG.L and MSCI MSCI.N has a series of indices that focus on specific segments like large and mid-cap companies, or those with high ESG ratings.

Currently, all benchmarks produced in the UK are regulated by the Financial Conduct Authority, but under the proposals, only benchmarks that pose systemic risks to UK financial markets will remain in scope, according to laid-out criteria.

The finance ministry said the changes would shrink the number of benchmark administrators by 80% to 90%.

It is seeking industry feedback on the plans by March 11, 2026.

The FCA said the reforms would allow it to build a regime more aligned with current market conditions and ease unnecessary burdens on the industry.

In May, the EU finalised revisions to its Benchmarks Regulation, which also saw the number of benchmarks subject to compulsory regulation slashed.