UK Government to Set Out Rules on Wind-down of Critical Benchmarks
HM Treasury notified that, after considering all responses, the government intends to bring forward further legislation, when the Parliamentary time allows, to address issues identified in the consultation on supporting the wind-down of critical benchmarks. The legislation will seek to reduce disruption that might arise from LIBOR transition with regard to the potential risk of contractual uncertainty and disputes in respect of contracts that have been unable to transition from LIBOR to another benchmark (tough legacy contracts), where FCA has exercised the powers given to it in the Financial Services Act.
The regulator received 32 responses to the consultation on supporting the wind-down of critical benchmarks, which ran from February 15, 2021 to March 15, 2021. The consultation invited responses on the case for additional legal protections for parties affected by the wind-down of a critical benchmark. Through the consultation, HM Treasury had intended 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.
HM Treasury has also published its reply to the Working Group on Sterling Risk Free Reference Rates on provisions to support the wind-down of critical benchmarks. HM Treasury believes that, wherever possible, parties should seek to transition contracts away from LIBOR ahead of the end of the 2021 and the government, FCA, and BoE will continue to work closely to encourage market-led transition from LIBOR and to monitor progress.
Related Links
Keywords: Europe, UK, Banking, Securities, Critical Benchmarks, Interest Rate Benchmark, LIBOR, Benchmarks Regulation, Legacy Contracts, Benchmark Reforms, FCA, HM Treasury
Previous Article
FSI Paper Examines Effectiveness of Bank Resolution FrameworksNext Article
EBA Publishes Phase 1 of Reporting Framework 3.1Related Articles
PRA Proposes Changes to Consolidated Prudential Rules Under CRD5/CRR2
PRA proposed rules (in CP12/21) for the application of existing consolidated prudential requirements to financial holding companies and mixed financial holding companies that have been approved or designated in accordance with Part 12B of the Financial Services and Markets Act 2000 (FSMA).
ECB Extends Leverage Ratio Relief for Banks Until March 2022
ECB Banking Supervision announced that euro area banks it directly supervises may continue to exclude certain central bank exposures from the leverage ratio until March 2022.
OSFI Consults on Treatment of Credit Valuation Adjustments
OSFI decided to increase the Domestic Stability Buffer from 1.00% to 2.50% of total risk-weighted assets, with effect from October 31, 2021.
HKMA Requires Banks to Submit Plans for Fintech Adoption
HKMA is requesting banks to participate in a tech baseline assessment, which forms part of the HKMA Fintech 2025 strategy.
OSFI Consults on Operational Risk Capital Data Management Expectations
OSFI published two documents to consult on the management of operational risk capital data for institutions required, or for those applying, to use the Basel III standardized approach for operational risk capital in Canada.
NGFS on Addressing Financial Stability Issues from Biodiversity Loss
The NGFS Study Group on Biodiversity and Financial Stability published a Vision paper exploring the case for action in addressing the financial stability concerns arising from biodiversity loss.
ACPR Publishes CREDITIMMO Version 2.3.0 Taxonomy for Banks
ACPR published the final version of CREDITIMMO 2.3.0 taxonomy for the decree of October 31, 2021.
EC Prolongs Italian Guarantee Scheme for Non-Performing Loans
EC, has approved, under the EU State Aid rules, the fourth prolongation of the Italian guarantee scheme to facilitate the securitization of non-performing loans.
ECB Amends Guideline on Temporary Collateral Easing Measures
ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.
EIOPA Releases Report on Artificial Intelligence Governance Principles
EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.
