Negotiators agreed on provisions to ensure EU financial market stability, ahead of the expected cessation of the London Interbank Offered Rate (LIBOR) in 2021.
Caroline Nagtegaal (Renew, NL), the lead MEP on behalf of the Economic and Monetary Affairs committee, said: "I am pleased that Parliament’s negotiating team has today reached a deal with the Council on this very important file. All the institutions stepped up their efforts to come to a swift agreement to ensure that the phasing out of widely-used benchmarks does not threaten financial stability within the European Union.”
Key elements of the deal
If necessary, the European Commission will be granted power to replace:
- “critical” benchmarks, which influence financial instruments and contracts with an average value of at least €500 billion and could thus affect the stability of financial markets across Europe;
- benchmarks with no, or very few, appropriate substitutes whose cessation would have a significant and adverse impact on market stability;
- third country benchmarks whose cessation would significantly disrupt the functioning of financial markets or pose a systemic risk for the financial system in the Union.
EU market participants will be able to use benchmarks administered in a country outside the EU until the end of 2023. The Commission will be empowered to adopt a delegated act by 15.06.2023 to prolong this extension by maximum two years until 31/12/2025, but such an extension will have to be duly motivated. The Commission will also prepare the report on legislative review by 15.06.2023 (accompanied where appropriate and motivated, by a legislative proposal).
Technical work on the text is now being carried out by the services of the three institutions. Thereafter, the agreement must be approved by the Economic and Monetary Affairs Committee and the Parliament as a whole.