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This briefing is divided into two parts. The first part sets out the reasons why an extension needs to be granted in respect of critical benchmarks and the consequences of failing to do so. The second part explains why the end of the transition period for non-critical benchmarks could also cause economic damage to the European Union and potentially pose a threat of market and economic disruption to its citizens, corporations and other institutions.
The European Benchmarks Regulation has driven great advances in increasing contractual robustness for benchmarks and the contracts which reference them.
The provisions which have achieved these advances are already live and not impacted by any extension to the transition period. The European market place has become safer and more efficient as a result.
Taking the steps recommended in extending the transition period for critical benchmarks will ensure that this good work remains in place while further efforts are undertaken to keep pace with global benchmark reforms without introducing significant, potentially even systemic, risks associated with prohibiting the use of benchmarks.
Extending it for non-critical benchmarks will allow third countries time to work with the European Commission to ensure that sufficient equivalence determinations are in place before any prohibition takes effect.
Critical and non-critical benchmarks are a vital resource for European citizens and institutions – depriving them of the ability to access them exposes them to risks that they cannot mitigate and places them at a very material commercial disadvantage.