Featured Product

    HM Treasury Consults on Supporting Wind-down of Critical Benchmarks

    February 15, 2021

    HM Treasury is inviting responses on the case for additional legal protection for parties affected by the wind-down of a critical benchmark. The Treasury seeks to understand the extent to which there is uncertainty over the continued application of a critical benchmark to contracts where FCA has exercised its power to direct a change in how the benchmark is determined under the Benchmarks Regulation and the risk of associated litigation. Where respondents can evidence the need for further protection, the consultation invites responses on the appropriate scope for any legal protection and whether the administrator of a “designated” critical benchmark should also be afforded specific protections where it is acting in accordance with the requirements imposed by FCA. This consultation will close on March 15, 2021.

    In October 2020, the UK government had introduced the Financial Services Bill, which includes amendments to the Benchmarks Regulation. The amendments provided FCA with new and enhanced powers to oversee the orderly wind-down of critical benchmarks, such as LIBOR. The Financial Services Bill amends the Benchmarks Regulation to enable FCA to manage a situation in which a critical benchmark has become or is at risk of becoming unrepresentative and it may be impractical or undesirable to restore its representativeness. Since the introduction of the Financial Services Bill, a number of stakeholders have approached HM Treasury to suggest incorporating a supplementary legal "safe harbor" for relevant legacy contracts. These stakeholders envisage that a legal safe harbor would act as a helpful contingency in reducing the potential risk of contractual uncertainty and disputes in respect of certain legacy contracts referencing or relying on a benchmark that has been designated as an Article 23A benchmark and that may be subject to a change in methodology under Article 23D. HM Treasury is therefore seeking views on whether a legal safe harbor could be a helpful supplement to the provisions inserted into the Benchmarks Regulation by the Financial Services Bill. 

    HM Treasury is interested to understand the likely causes of action, potential liabilities, or grounds for litigation that would support the case for a legal safe harbor. Importantly, HM Treasury welcomes views on how these could inform the operative elements of a legal safe harbor. HM Treasury is interested in whether, and how, it could provide greater legal certainty for contracts that reference or rely on a benchmark that has been designated as an Article 23A benchmark that may be subject to a change in methodology under Article 23D. In addition to the possibility of providing users of a critical benchmark with a legal safe harbor, HM Treasury is also considering whether there is a case for providing legal protection for the administrator of a critical benchmark, in particular when it publishes a critical benchmark that has been designated as an Article 23A benchmark and may be subject to a change in methodology under Article 23D. 

     

    Related Links

    Comment Due Date: March 15, 2021

    Keywords: Europe, UK, Banking, Securities, Critical Benchmarks, Interest Rate Benchmark, LIBOR, Financial Services Bill, Benchmarks Regulation, Legacy Contracts, FCA, HM Treasury

    Related Articles
    News

    EBA Clarifies Use of COVID-19-Impacted Data for IRB Credit Risk Models

    The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.

    June 21, 2022 WebPage Regulatory News
    News

    EP Reaches Agreement on Corporate Sustainability Reporting Directive

    The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).

    June 21, 2022 WebPage Regulatory News
    News

    PRA Consults on Model Risk Management Principles for Banks

    The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.

    June 21, 2022 WebPage Regulatory News
    News

    EC Regulation Amends Standards for Calculating Credit Risk Adjustments

    The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.

    June 21, 2022 WebPage Regulatory News
    News

    HKMA Announces Launch of Data Repository on Sustainable Finance

    The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.

    June 21, 2022 WebPage Regulatory News
    News

    BIS Hub Updates Work Program for 2022, Announces New Projects

    The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.

    June 17, 2022 WebPage Regulatory News
    News

    EIOPA Issues Cyber Underwriting Proposal, Statement on Open Insurance

    The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.

    June 17, 2022 WebPage Regulatory News
    News

    NGFS Report on Integration of G-Cubed Model into NGFS Scenarios

    The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.

    June 17, 2022 WebPage Regulatory News
    News

    US Senate Members Seek Details on SEC Proposed Climate Disclosure Rule

    Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)

    June 16, 2022 WebPage Regulatory News
    News

    EIOPA Consults on Review of Securitization Framework in Solvency II

    The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.

    June 16, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8301