Activities of Ville NIINISTÖ related to 2020/0154(COD)
Shadow reports (1)
REPORT on the proposal for a regulation of the European Parliament and of the Council amending 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
Amendments (14)
Amendment 12 #
Proposal for a regulation
Recital 1
Recital 1
(1) In order to hedge against exposure to foreign exchange rate volatility in currencies that are not readily convertible or subject to exchange controls, companies in the Union enter into non-deliverable currency forwards and swaps. Those instruments enable their users to protect against volatility of foreign currencies that are not readily convertible into a base currency, such as the dollar or the euro. The unavailability of foreign currency spot exchange rates to calculate the pay-outs due under currency forwards and swaps would have a negative effect on companies in the Union that export to emerging markets or hold assets in those markets, with consequent exposure to fluctuations of emerging market currencies. Following the expiration of the transitional period set out in paragraphs 4a and 4b 5 of Article 51 of Regulation (EU) 2016/1011 of the European Parliament and of the Council6 , the use of spot foreign exchange rates provided by a third country administrator other than a central bank will no longer be possible. _________________ 6 Regulation (EU) 2016/1011 of the European Parliament and of the Council of 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds and amending Directives 2008/48/EC and 2014/17/EU and Regulation (EU) No 596/2014 (OJ L 171, 29.6.2016, p. 1).
Amendment 14 #
Proposal for a regulation
Recital 5
Recital 5
(5) To be ableArticle 28(2) of Regulation 2016/1011 requires supervised entities other than benchmark administrators to have contingency plans in place for the event that a benchmark changes materially or ceases to be provide ford. If possible, those contingency plans should identify one or more potential replacement benchmarks. That decentralised, non-legislative method should remain the default method for provisioning for the event of a benchmark cessation, but the LIBOR case has shown that, in practice, that method might not always be sufficient. Therefore, to ensure an orderly wind down of contracts that reference a widely used benchmark the cessation of which may result in negative consequences that produce significant disruption in the functioning of financial markets in the Union and where such contracts cannot be renegotiated to include a contractual fall- back rate by the time of that benchmark’s cessation, a framework accompanying the cessation of such benchmarks should be laid down. That frameworkthere should be a fall-back method that provides for mandatory public designation of a replacement benchmark. That method should comprise a mechanism aimed at transitioning such contracts to suitable replacement benchmarks. Replacement benchmarks should ensure avoiding contract frustration which may result in negative consequences that produce significant disruption in the functioning of financial markets in the Union.
Amendment 21 #
Proposal for a regulation
Article 1 – paragraph 1 – point b
Article 1 – paragraph 1 – point b
Regulation (EU) 2016/1011
Article 2 – paragraph 4
Article 2 – paragraph 4
4. The Commission shall adopt delegated acts in accordance with Article 49 to create and update as appropriate a list of foreign exchange benchmarks that fulfil the criteria laid down in paragraph 3. Competent authorities of supervised entities that use third country foreign exchange benchmarks that are designated by the Commission in accordance with paragraph 3 shall report to the Commission and to ESMA on the number of derivative contracts that use that foreign exchange benchmark for hedging against third country currency volatility at least every two years.; The Commission shall conduct public consultations to identify the foreign exchange benchmarks that meet the criteria of paragraph 3.
Amendment 23 #
Proposal for a regulation
Article 1 – paragraph 1 a (new)
Article 1 – paragraph 1 a (new)
Regulation (EU) 2016/1011
Article 3 – paragraph 1 – point 22 a (new)
Article 3 – paragraph 1 – point 22 a (new)
Amendment 27 #
Proposal for a regulation
Article 1 – paragraph 2 – introductory part Regulation (EU) 2016/1011
Article 1 – paragraph 2 – introductory part Regulation (EU) 2016/1011
(2) the following Article 238a is inserted:
Amendment 28 #
Proposal for a regulation
Article 1 – paragraph 2 Regulation (EU) 2016/1011
Article 1 – paragraph 2 Regulation (EU) 2016/1011
Article 23a8a Mandatory replacement of a benchmark
Amendment 29 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Regulation (EU) 2016/1011
Article 23a – paragraph 1 – introductory part
Article 23a – paragraph 1 – introductory part
"This Article shall apply to: (a) any contract or any financial instrument that is governed by the laws of one of the Member States and that references a benchmark; and (b) any contract that is subject to the law of a third country, but the parties to which are all established in the Union and where the law of that third country does not provide for an orderly wind down or cessation of a benchmark."
Amendment 34 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
(a) the competent authority for the administrator of that benchmark has issued a public statement, or has published information, in which it is announcedstated publicly that the capability of thate benchmark to measure the underlying market or economic reality cannot be restored through the exercise of any of the remedial powers referred to in Article 23;
Amendment 36 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Regulation (EU) 2016/1011
Article 23a – paragraph 1 – point b
Article 23a – paragraph 1 – point b
(b) the administrator of a benchmark has issued a public statement, or has published information, or such public statement has been made or such information has been published, or someone acting on behalf of thate administrator, in which it is announcedhas stated publicly that that administrator has ceased or will cease to provide the benchmark, permanently or indefinitely, provided that, at the time of the issuance of the statement or the publication of the information, there is no successor administrator that will continue to provide the benchmark;
Amendment 37 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Regulation (EU) 2016/1011
Article 23a – paragraph 1 – point c
Article 23a – paragraph 1 – point c
(c) the competent authority for the administrator of a benchmark or any entity with insolvency or resolution authority over the administrator of that benchmark has issued a public statement or has published information in which it is statedstated publicly that the administrator of that benchmark has ceased or will cease to provide that benchmark permanently or indefinitely, provided that, at the time of the issuance of the statement or the publication of the information, there is no successor administrator that will continue to provide that benchmark.
Amendment 41 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Regulation (EU) 2016/1011
Article 23a – paragraph 2 – point b
Article 23a – paragraph 2 – point b
(b) those financial instruments, contracts or performance measurements contain no suitableinsufficient fall back provisions.;
Amendment 44 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Regulation (EU) 2016/1011
Article 23a – paragraph 2 – point b a (new)
Article 23a – paragraph 2 – point b a (new)
(b a) the contracting parties have not agreed on alternative fall-back provisions before the permanent cessation of the benchmark.
Amendment 47 #
Proposal for a regulation
Article 1 – paragraph 2
Article 1 – paragraph 2
Regulation (EU) 2016/1011
Article 23a – paragraph 4 a (new)
Article 23a – paragraph 4 a (new)
(4 a) This Article shall apply to critical and significant benchmarks and to third- country benchmarks the cessation of which would lead to significant adverse impacts on market integrity, financial stability, consumers, the real economy, or the financing of households and businesses in one or more Member States.
Amendment 49 #
Proposal for a regulation
Article 1 – paragraph 2 a (new)
Article 1 – paragraph 2 a (new)
Regulation (EU) 2016/1011
Article 28 – paragraph 2
Article 28 – paragraph 2
(2 a) Article 28(2) is replaced by the following: "2. Supervised entities other than an administrator as referred to in paragraph 1 that use a benchmark shall produce and maintain robust written plans setting out the actions that they would take in the event that a benchmark materially changes or ceases to be provided. Where feasible and appropriate, such plans shall nominate one or several alternative benchmarks that could be referenced to substitute the benchmarks no longer provided, indicating why such benchmarks would be suitable alternatives. The supervised entities shall, upon request, provide send those plans and any updates to them to the relevant competent authority with those plans and any updatesout any undue delay and shall reflect them in the contractual relationship with clients. Competent authorities shall assess the robustness of these plans." Or. en (32016R1011)