ESMA Publishes Guidance on EURIBOR Fallbacks, Issues Other Updates
The European Securities and Markets Authority (ESMA) published an updated register of crowdfunding service providers, guidance on EURIBOR fallbacks for corporate lending products, and decided to postpone the amendment of the European Single Electronic Format (ESEF) regulatory technical standards to 2024. However, issuers will still be able to fulfil their regulatory obligations to mark up their 2023 IFRS consolidated financial statements as the 2022 ESEF Taxonomy is mandatory and applicable for financial years beginning on or after January 01, 2023. Additionally, ESMA will perform the preparatory work to start developing the ESEF sustainability reporting taxonomy and related reporting requirements based on the European Sustainability Reporting Standards Taxonomy. ESMA also published the consolidated questions and answers (Q&A) on the Sustainable Finance Disclosure Regulation (SFDR or Regulation 2019/2088) and the SFDR Delegated Regulation (2022/1288), which includes Q&A on the definition of sustainable investment, disclosures on principal adverse impacts, financial products, and taxonomy aligned investment disclosures.
The EURIBOR fallbacks guidance is intended for Implementing the recommendations on EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates. This guidance is specific to corporate lending products and is addressed to all parties active in EURIBOR-referencing corporate lending products, including lenders, borrowers, investors, advisers, and legal firms. The working group previously published recommendations for EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates in May 2021. While EURIBOR is not scheduled to be discontinued, this does not negate the need for market participants to include robust fallback language in their contracts. Robust fallbacks are a requirement of the EU Benchmarks Regulation and the working group has previously stressed the importance of including robust fallbacks in all financial contracts, not just those within the scope of the Benchmarks Regulation. The working group understands that these recommendations are not generally being adopted in corporate lending products for various reasons. The working group, however, reiterates the importance of the adoption of EURIBOR fallback rates and trigger events in new and refinanced euro denominated corporate lending products to avoid operational and market disruption risks. Thus, the working group decided at its December 2022 meeting to provide this further guidance on corporate lending products to foster the adoption of €STR-based EURIBOR fallbacks.
Related Links
Keywords: Europe, EU, Banking, Interest Rate Benchmarks, ESEF, Q&A, IFRS Taxonomy, Lending, SFDR, ESEF Regulation, Crowdfunding Service Providers, Benchmark Reforms, EURIBOR Fallbacks, ESMA
Previous Article
US Agencies Make Various Announcements for Banking SectorRelated Articles
ISSB Sustainability Standards Expected to Become Global Baseline
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
BCBS Assesses NSFR and Large Exposures Rules in US
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.
Global Agencies Focus on ESG Data, Climate Litigation and Nature Risks
At the global level, supervisory efforts are increasingly focused on addressing climate risks via better quality data and innovative use of technologies such as generative artificial intelligence (AI) and blockchain.
ISSB Standards Shine Spotlight on Comparability of ESG Disclosures
The finalization of the IFRS sustainability disclosure standards in late June 2023 has brought to the forefront the themes of the harmonization of sustainability disclosures
EBA Issues Several Regulatory and Reporting Updates for Banks
The European Banking Authority (EBA) recently issued several regulatory publications impacting the banking sector.
BCBS Proposes to Revise Core Principles for Banking Supervision
The Basel Committee on Banking Supervision (BCBS) launched a consultation on revisions to the core principles for effective banking supervision, with the comment period ending on October 06, 2023.
US Proposes Final Basel Rules, Transition Period to Start in July 2025
The U.S. banking agencies (FDIC, FED, and OCC) recently proposed rules implementing the final Basel III reforms, also known as the Basel III Endgame.
FSB Report Outlines Next Steps for Climate Risk Roadmap
The Financial Stability Board (FSB) recently published the second annual progress report on the July 2021 roadmap to address climate-related financial risks.
EBA Plans on Ad-hoc ESG Data Collection and Climate Scenario Exercise
The recognition of climate change as a systemic risk to the global economy has further intensified regulatory and supervisory focus on monitoring of the environmental, social, and governance (ESG) risks.