By / November 30, 2020

Replacement benchmarks for financial benchmarks in cessation [EU Legislation in Progress]

The pricing of many financial instruments and contracts depends on the accuracy and integrity of (financial) benchmarks, i.e. indices, by reference to which the amounts payable under such financial instruments or contracts, or the value of certain financial instruments, are determined.

© shane / Adobe Stock

Written by Angelos Delivorias (2nd edition, updated on 1.7.2021),

© shane / Adobe Stock

The pricing of many financial instruments and contracts depends on the accuracy and integrity of (financial) benchmarks, i.e. indices, by reference to which the amounts payable under such financial instruments or contracts, or the value of certain financial instruments, are determined. The anticipated discontinuation of such a benchmark (LIBOR) after the end of 2021 has created fears that it could lead to disruption in the internal market, given that the Benchmarks Regulation ((EU) 2016/1011) does not provide for mechanisms to organise the orderly discontinuation of systemically important benchmarks in the EU. That is why the Commission has proposed to amend the said regulation.

The co-legislators significantly amended the Commission’s proposal. Their amendments deal, among other things, with the replacement of a benchmark by EU, or by national law, set additional obligations for supervised entities using a benchmark, regulate the Commission’s powers to adopt delegated acts and establish additional obligations for the Commission with regards to its proposed consultation. The European Parliament adopted the compromise agreement in plenary on 19 January 2021. On 2 February 2021, the Council adopted the act. The final act was published in the Official Journal of the EU on 12 February 2021.

Complete version

Exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation
Committee responsible: Economic and Monetary Affairs (ECON) COM(2020) 337
24.7.2020
Rapporteurs: Caroline Nagtegaal (Renew, The Netherlands) 2020/0154(COD)
Shadow rapporteurs: Luděk Niedermayer (EPP, Czechia)
Jonás Fernández (S&D, Spain)
Jörg Meuthen (ID, Germany)
Ville Niinistö (Greens/EFA, Finland)
Patryk Jaki (ECR, Poland)
José Gusmão (GUE/NGL, Portugal)
Ordinary legislative procedure (COD) (Parliament and Council on equal footing – formerly ‘co-decision’)
Procedure completed. Regulation (EU) 2021/168
OJ L 49, 12.2.2021, pp. 6–17


Related Articles
Comments

Leave a Reply

%d bloggers like this: