HM Treasury Consultation on new UK benchmarks regime

Overview

HM Treasury (HMT) has opened a consultation on replacing the on‑shored UK Benchmarks Regulation (BMR) with a new, targeted framework: the Specified Authorised Benchmarks Regime (SABR). The SABR would be focused only on benchmarks and administrators that pose systemic risks to UK markets and consumers. If implemented, the reforms would materially narrow the scope of benchmark regulation in the UK, and so are similar in spirit to the changes applying to the EU BMR from 1 January 2026 (see our client note on this here).

Core proposal: a designation-based regime

HMT proposes to repeal the BMR and introduce SABR, under which only benchmarks or administrators designated by HMT (on FCA advice) would be regulated. Designation would be based on qualitative criteria assessing whether cessation or loss of representativeness could cause significant and adverse impacts on market integrity, financial stability, consumers or the relevant underlying market where substitutes are few or switching is not practicable. HMT may also designate at the entity level where the aggregate impact of an administrator’s benchmarks poses systemic risk.

The government anticipates potentially removing 80–90% of current administrators from regulation, moving the UK from a regime covering “millions” of benchmarks and c.45 domestic administrators to a small set of designated benchmarks/administrators. Designations would be published, with processes for designation and de‑designation. There would be no voluntary “opt‑in” to regulation.

Users: removal of the “use only regulated benchmarks” obligation

Given the narrowed scope, HMT proposes to remove the BMR obligation on certain UK authorised firms to use only regulated benchmarks. The FCA would instead set any user‑side expectations via Handbook rules and guidance, for example covering topics around risk management and cessation planning. Firms themselves would remain responsible for due diligence, robust fallback language and appropriate benchmark selection.

Contributors: narrower scope, with questions on non‑price data

Existing obligations for authorised contributors to designated benchmarks would be retained and delegated to the FCA, including the power to compel contributions from authorised persons. Non‑authorised contributors would fall outside SABR, and so their obligations under the current regime would be removed. HMT is consulting on whether the FCA needs powers over contributors of non‑price data (e.g., ESG metrics), which do not count as “input data” under the current regime, reflecting evolving methodologies.

Overseas benchmarks: streamlined access via an Overseas Recognition Regime

Under SABR, only designated overseas benchmarks/administrators would need a UK access route, and most overseas benchmarks would fall outside scope. HMT proposes to replace BMR equivalence with an Overseas Recognition Regime (ORR), aligned to the government’s approach to unilateral recognition. Where a designated overseas benchmark/administrator is already regulated in a jurisdiction with an ORR determination, FCA authorisation would not be required. For cases without ORR coverage, HMT is consulting on maintaining recognition/endorsement or instead using the FCA’s approach to international firms (e.g., requiring a UK branch or subsidiary responsible for oversight).

FCA powers: calibrated intervention

HMT proposes to retain and adapt the FCA’s post‑LIBOR intervention toolkit for designated benchmarks, including the ability to mandate continued publication, restrict some or all new use, and require methodology changes, so that orderly wind‑downs remain possible across different benchmark types. The FCA could also, where necessary and aligned to its objectives, restrict use by authorised firms to mitigate harm, including in support of overseas wind‑downs.

ESG and other special benchmarks: scope reduction and regulatory alignment

There is no proposal to give ESG benchmarks or other special categories of benchmarks (such as commodity benchmarks) a different status from other benchmarks, and hence they would only fall within the SABR when meeting the criteria for designation. Hence, many would fall out of scope given SABR’s focus on systemic importance. HMT also queries whether to retain the low carbon benchmark labels and notes that potential interactions with the new UK ESG ratings regime where benchmarks cease to be regulated (and hence can no longer rely on certain exemptions) would need to be addressed.

Practical implications for firms

For administrators, the proposal signals a shift from universal regulation to risk‑based designation. Many UK administrators may exit direct FCA supervision, while designated administrators will face new obligations determined by the FCA. Administrators should consider whether any of their benchmarks are likely to meet the designation criteria on an individual basis, and administrators with large suites of benchmarks should assess the potential for designation on an aggregate basis. Administrators that are likely to fall outside of regulation should consider the impact on their business. For instance, whether this impacts their use of exemptions under other regimes like the upcoming regulation of ESG ratings, or their ability to provide benchmarks in other jurisdictions.

For users, the removal of the BMR obligation to use only regulated benchmarks increases discretion but also heightens the onus on internal risk frameworks, fallback drafting and due diligence. Firms should consider the knock on impacts of benchmarks they use ceasing to be regulated, such as on product governance, prospectus disclosures and MAR compliance.

Next steps

The consultation closes on 11 March 2026. HMT has not provided a concrete timeline for when the proposals will be taken forward after this.