Follow Us

Follow us on Twitter  Follow us on LinkedIn
 

06 November 2019

ECB: Working group on euro risk-free rates issues high level recommendations for fallback provisions in contracts referencing EURIBOR


The private sector working group on euro risk-free rates has published a set of recommendations for fallback provisions in contracts for cash products and derivative transactions referencing EURIBOR. These recommendations support compliance with the EU Benchmarks Regulation (BMR) and enhance legal and commercial certainty.

Among other things, the working group recommends that market participants incorporate fallback provisions in all new financial instruments and contracts referencing EURIBOR, regardless of whether they fall within the scope of the BMR.

Legacy financial instruments and contracts referencing EURIBOR that were entered into after 1 January 2018 and that fall within the scope of the BMR should be covered by “robust written plans” prepared by supervised entities in accordance with Article 28(2) of the BMR.

For legacy contracts which do not contain appropriately worded fallback provisions, to the extent practicable, market participants should introduce EURIBOR fallback provisions, or enhance existing provisions, when such financial instruments and contracts are next amended or updated. Where no specific fallback provisions are recommended and pending further guidance from the working group or regulatory authorities, market participants may wish to consider including generic language in their fallback provisions.

To this end, the working group is recommending a standard text for a generic EURIBOR fallback provision.

Full press release on ECB

Full report on ECB



© ECB - European Central Bank


< Next Previous >
Key
 Hover over the blue highlighted text to view the acronym meaning
Hover over these icons for more information



Add new comment