The Financial Conduct Authority has published a
Dear CEO Letter setting out its key concerns and priorities over the next two years for benchmark administrators. The FCA's supervisory priorities include:
- corporate governance and oversight — the FCA will conduct a governance review in late 2025 to assess how the U.K.-regulated benchmark administrators' business is governed and led by U.K. Approved Persons under the Senior Managers Regime, and to what extent they are able to oversee the full range of risks to which the firm is exposed;
- data quality controls — in early 2025, the FCA will evaluate the adequacy of the due diligence BMAs perform on data providers. Through this multi-firm data controls project, the FCA will seek evidence of how BMAs' control frameworks adequately mitigate the additional risks associated with unregulated or innovative data; and
- benchmarks controls — in H2 2025, the FCA intends to evaluate the adequacy of end to-end benchmark controls. This will involve a multi-firm review, across different asset types, focusing on custom and more complex benchmarks. The FCA will seek evidence that firms have adapted their controls for the launch, calculation, and rebalancing of custom or complex benchmarks.
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