Market welcomes delay to Benchmarks Regulation

Author: Olly Jackson | Published: 26 Feb 2019

Following the European Commission’s decision to delay its reform of EU financial benchmarks by two years yesterday, market sources have told IFLR that they welcome the decision.

EU benchmarks Eonia and Euribor must be either replaced or reformed because they do not comply with the EU’s incoming Benchmarks Regulation. The deadline was previously set for the end of this year, but an extra two years gives the market more preparation time.

The deadline for third-country benchmarks produced outside the EU was also extended by two years.

"The ECB should start publishing the new replacement variable rate as soon as possible"

Paul Deakins, partner at Clifford Chance, said that the previous deadline put legacy contracts at risk, particularly if aggressively enforced.

Many existing contracts do not contain the necessary mechanisms to cater for the phasing-out of interbank offered rates (ibors) and the transition to a risk free rate. There is a...