Position paper on the European Commissinos legislative draft for the review of the Benchmark regulation.

The German Banking Industry Committee welcomes the European Commission’s decision to provide for the possibility to designate a statutory replacement rate for benchmarks, whose cessation would result in a significant disruption in the functioning of financial markets in the Union (BMR statutory replacement).

The proposal will add an additional layer of protection regarding critical benchmarks: The statutory replacement option, together with the already existing tools for mandatory continuation of benchmarks for a certain period of time, will provide market participants with the required additional time for a bilateral contractual replacement. At the same time it will ensure legal certainty by providing for a statutory fallback benchmark as a backstop.

However, the proposal does not address several issues, which market participants expected to be resolved in connection with the BMR review. If these further issues cannot be resolved in connection with the present proposal, they will have to be addressed in a further review. Such a review should take place as soon as possible, ideally within the next year.