Following the adoption of the Council general approach 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 on 7 October 2020, the European Parliament Economic and Monetary Affairs (ECON) Committee has published its draft legislative report on the same proposal. The report was prepared by rapporteur Caroline Nagtegaal (Renew Europe, NL) and published on 8 October 2020. Members of the ECON Committee have until 28 October to file counterproposals to the draft report. Following the deadline, Nagtegaal expects the legislative report to be adopted by the ECON Committee by mid-November, after which trilogue negotiations with the Council can commence.

In terms of the amendments proposed by the European Parliament rapporteur, the more notable ones are:

• To provide more certainty to EU firms that need to comply with the Benchmarks Regulation (BMR) by explicitly providing relief from EU clearing and collateral requirements for legacy contracts in all derivatives asset classes.
• To add a requirement for the European Commission to regularly update the proposed list of foreign exchange benchmarks that are exempted from the BMR. The proposed requirement for supervisory authorities to report to the Commission and to the European Securities and Markets Authority at least every two years the number of derivative contracts that make use one of these foreign exchange benchmarks is removed.
• Nagtegaal is of the view that regulatory interference in benchmarks methodologies should only be possible for critical interest rate benchmarks in the event of a large market stability risk.
• Lastly, the draft report amends the Commission proposal by narrowing the Commission’s power to designate a replacement benchmark to financial instruments, contracts or performance measurements that no not contain fall back provisions only.