Relative to financial institutions, corporates are light users of benchmarks. They are primarily used as reference rates in loans from banks, derivatives with banks such as interest rate swaps and forward rate agreements, intra-group (intercompany) loans to fund business units, penalty interest rates for late payment by customers, early payment discounts from suppliers, and internal derivatives with subsidiaries some of which may offset the external derivatives.
In principle the ACT agrees with the introduction of Fair, Reasonable and Non-Discriminatory (FRAND) requirements to address competition concerns relating to access to regulated benchmarks. We also agree with the principle that different fees can be charged to different users where this is objectively justified - indeed consider it important that they should be. In determining the level of fees we would stress that corporates typically are “light” users of benchmarks. Hence they should be charged a different fee level, as distinct from merely being charged a different fee.
