On May 20, 2021, the UK Financial Conduct Authority (FCA) published a consultation on its proposed policy framework for exercising two of its new powers under the Benchmarks Regulation, as introduced by the UK Financial Services Act 2021 (UK BMR). These powers are designed to facilitate an orderly wind down of critical benchmarks such as LIBOR, and were discussed in more detail in our earlier blog post.

Continue Reading FCA Consults on Use of New LIBOR Transition Powers

On February 13, 2021, the European Union’s (EU) amendments to the Benchmarks Regulation (2016/1011) (the Amended BMR) came into force, which provides a legislative fix for the cessation of LIBOR in legacy contracts. The Amended BMR gives the European Commission (the Commission) the power to replace critical benchmarks and other relevant benchmarks if their termination would significantly disrupt or otherwise affect the functioning of the financial markets in the EU.

Continue Reading European Union’s Legislative Fix for the Cessation of LIBOR

In September 2018, the International Swaps and Derivatives Association (ISDA) published the ISDA Benchmarks Supplement as a response to the EU Benchmarks Regulation (BMR), which regulates the use of benchmarks.

The term “benchmarks” is broadly defined as any index that is used to (a) determine the amount payable under a financial contract or financial instrument, which includes derivatives contracts; (b) determine the value of a financial contract or financial instrument; or (c) measure the performance of an investment fund with the purpose of tracking the return of such index or of defining the asset allocation of a portfolio or of computing the performance fees.

The ISDA Benchmarks Supplement allows entities to amend the contractual triggers and fallbacks of over-the-counter (OTC) derivatives documentation that references interest rate, foreign exchange, equity and commodities benchmarks under the current ISDA definitions incorporated into transactions using the ISDA Master Agreement and associated documentation.

Continue Reading Update on LIBOR Reforms and ISDA Documentation