Representatives from Member States have reached a compromise on the Commission’s proposal for a Regulation amending the Benchmarks Regulation ((EU) 2016/1011) as regards the exemption of certain third country foreign exchange benchmarks and the designation of replacement benchmarks for certain benchmarks in cessation. The Council general approach was adopted following a ‘silence procedure’ on the proposed compromise text, which had not been broken by any of the Member States. The general approach contains a number of amendments to the original Commission proposal and will serve as a negotiating mandate for trilogue discussions with the European Parliament. In the European Parliament itself, rapporteur Caroline Nagtegaal (Renew Europe, NL) is due to publish her draft report sometime during the week of 5 October. After publication, members of the European Parliament’s ECON Committee have until 28 October 2020 to propose amendments to the draft report. Following this deadline, Nagtegaal expects the legislative report to be adopted by the ECON Committee by mid-November, after which trilogue negotiations can commence.

On the content of the Council general approach, the following points are noteworthy:

•  The Council expands the scope of contracts and financial instruments referencing benchmarks for which the Commission would gain the power to designate a statutory replacement rate in instances of cessation. The Council proposes to also include financial contracts and instruments that are subject to the law of a Member State and a number of third-country law contacts.
•   A provision has been included on possible statutory replacements of benchmarks that have a fall-back provision, but only where the application of such a fall-back position would risk a Member State’s financial stability.
•  The Council proposes to extend the transitional regime for third-country benchmarks until the end of 2025, i.e. beyond the currently applicable deadline of 31 December 2021.