The future of UK benchmarks regulation

July 2026

HM Treasury’s (HMT) consultation on a Specified Authorised Benchmarks Regime (SABR) is the latest step in the evolution of UK benchmarks’ regulation. As HMT considers feedback on its proposal, this article explores the drivers behind SABR and its possible impacts on the benchmarks market.

Before 2012, major financial benchmarks such as LIBOR operated in the background of financial services with limited formal oversight. The LIBOR scandal exposed vulnerabilities in governance, conflicts of interest, and the fragility of submission-based methodologies—prompting a step-change in regulatory intervention in conduct and transparency.

The Financial Services Act 2012 criminalised benchmark manipulation and brought LIBOR under Financial Conduct Authority supervision.

EU policy makers soon concluded that the risks were not confined to LIBOR, but reflected wider potential weaknesses across the benchmark ecosystem. The EU Benchmarks Regulation (BMR) followed, creating a comprehensive framework intended to restore trust in benchmarks that were deeply embedded in financial markets. It expanded the perimeter and imposed detailed requirements on administrators, contributors, and users, reflecting concern about systemic risk from unreliable or poorly governed benchmarks.

Implementation also underscored LIBOR’s structural weakness: limited underlying transaction data made it increasingly unrepresentative and vulnerable. This accelerated the global transition to risk-free rates such as SONIA, grounded in observable transactions, and culminated in LIBOR’s phase-out by 2023.

The drivers of this latest reform focus on competitiveness and economic growth. The UK’s onshore BMR is widely viewed as overly broad, capturing many non-systemic benchmarks and imposing costs that may not be justified by the risks. HMT ’s newly proposed SABR would narrow direct regulation to benchmarks designated as systemically important, aiming for a more targeted, proportionate and agile regime.

While the shift to a narrower, risk-based model is broadly attractive, it also creates potential unintended consequences for investor protection, emerging benchmark risks, market dynamics, and the UK’s international positioning as an attractive location for administering benchmarks for a global market.

Possible impacts of SABR

Reduced regulatory coverage and implications for retail investors

By limiting direct regulation to systemically important benchmarks, SABR would exclude many benchmarks currently within UK BMR scope. This reduces burden for smaller administrators but may weaken protection for end users especially retail investor, given the continued growth of passive investing and retail exposure to products that track indices. If benchmarks widely used in retail products sit outside regulation their governance and transparency standards may vary. Retail investors may be less able than institutions to assess methodology, conflicts of interest, and operational resilience. The designation framework may therefore need to consider not only systemic importance but also consider retail usage and the link to potential consumer harm.
Emerging benchmark types and evolving risk profiles

BMR was shaped by lessons from LIBOR and submission-based interest rate benchmarks, but today’s market includes many new products and benchmark types (e.g., ESG indices, private credit benchmarks, and crypto asset indices) with different and sometimes higher-risk features: complex methodologies, less mature input data, and with inherent risks. If SABR designates benchmarks primarily by current systemic importance, some higher-risk emerging benchmarks may remain outside oversight until they are already widely used. To avoid regulatory blind spots, the designation process should be forward-looking and flexible enough to capture benchmarks that pose elevated integrity or consumer risks even before they become systemically significant.
Redistribution of regulatory burden across the chain

SABR would also shift responsibilities along the chain. Fewer regulated benchmarks may mean lower direct obligations for many administrators. However, users (banks, asset managers, and others) may need to increase due diligence on unregulated benchmarks—assessing governance, methodology, data quality and conflicts. This could partially offset the intended reduction in aggregate compliance costs. It may also drive unintended behaviours. Users may gravitate toward regulated benchmarks to reduce legal and operational uncertainty, creating a two-tier market that disadvantages smaller or newer benchmark providers and potentially dampens competition and innovation especially if there is no practical ‘opt-in’ pathway for non-designated benchmarks to be supervised.
Competitive dynamics and the friction of regulatory non-alignment

A central objective of SABR is to enhance the UK’s competitiveness as a global financial centre by reducing regulatory complexity and burden. However, differences in regulatory scope between jurisdictions may create incentives for firms to align with regimes that offer greater certainty or broader recognition.

SABR is intended to support UK competitiveness by simplifying regulation, but divergence from the EU’s broader benchmark perimeter will impact cross-border usability and perceptions of robustness. If EU authorisation is viewed as the more widely recognised ‘quality mark’, administrators may prefer to issue products in the EU to maximise distribution and reduce uncertainty, creating scope for regulatory arbitrage. For the UK, the challenge is to reduce unnecessary burden while maintaining sufficient credibility and international alignment so that UK-regulated benchmarks remain trusted and usable across global jurisdictions.

Balancing proportionality with market integrity

Overall, SABR represents a broader post-crisis shift from comprehensive rules to targeted, proportionate policy and supervision with potential benefits for administrators, innovation, competition and the UK’s wider competitiveness agenda. The core policy challenge is how to deliver that proportionality while preserving trust in benchmarks that underpin retail products and wholesale markets alike. Key design choices—especially around designation criteria and regulatory flexibility—will determine whether SABR creates new oversight gaps (including for emerging benchmark types), prevents undue due diligence burden simply shifting to benchmark users, and maintains the UK’s credibility and competitiveness internationally.