Administrator Protections
HM Treasury’s consultation also explored the case for additional legislative protections for the administrator of a critical benchmark designated by the FCA under Article 23A of the BMR. The administrator is responsible for the calculation of a benchmark and its publication. Stakeholders have identified the risk that parties may look to contest the continued publication of an Article 23A benchmark by its administrator or seek damages against the administrator for doing so.
	As set out in paragraph 45, under the BMR the FCA has the power to compel the administrator of a critical benchmark to continue to publish that benchmark under specific circumstances. The FCA also has the power to designate the benchmark under Article 23A of the BMR and to impose requirements on the benchmark administrator under Article 23D(2), relating to the methodology, rules, or code of conduct of the benchmark. The continued publication of the benchmark by an administrator is therefore necessary for the orderly wind-down of a benchmark under Article 23A of the BMR.
	Responses to HM Treasury’s consultation indicated that the administrator could be subject to litigation for action or inaction it takes in accordance with requirements imposed by the FCA to continue publication of an Article 23A benchmark using a revised methodology. Where the administrator of an Article 23A benchmark is subject to legal challenge for complying with statutory requirements imposed by the FCA under the BMR, it could impose a significant and unmerited burden on the administrator of an Article 23A benchmark. Such action could also serve to undermine parties’ confidence in using the benchmark, undermining the operation of the FCA’s powers to oversee an orderly wind-down of the benchmark.
	While Annex 4 of the BMR, inserted by the FS Act 2021, allows the FCA to modify the statutory requirements imposed by the BMR in relation to Article 23A benchmarks, including on the administrator of an Article 23A benchmark (see paragraph 52), it does not prevent claims from arising against the administrator on the basis of actions that it is required to take in respect of the benchmark. Consequently, this Act inserts Article 23FC into the BMR, which grants the administrator of an Article 23A benchmark immunity from claims for damages in certain circumstances. Specifically, it provides that the administrator of an Article 23A benchmark is not liable in damages where it takes action or inaction in accordance with requirements imposed by the FCA under paragraph 2 of Article 23D. In the case of LIBOR wind-down, this would protect the administrator from claims of damages where it was acting in accordance with the FCA’s direction to calculate LIBOR using a synthetic methodology. It also protects the administrator where it publishes the benchmark as calculated in accordance with those requirements.
	The protections afforded to the administrator by Article 23FC do not provide the administrator of an Article 23A benchmark with immunity where it does not act in accordance with requirements imposed upon it by the FCA, or where it exercises a discretion conferred upon it by the FCA, or a discretion as to the time or manner of the benchmark’s publication.