EU policymakers agreed to grant the providers of "critical benchmarks" (i.e., interest rates such as Euribor or the Euro Overnight Index Average) until December 31, 2021 to comply with the EU Benchmark Regulation. Given the importance to EU companies of benchmarks that are produced outside the European Union, the additional time will also allow the European Union to work with non-EU regulators on how these benchmarks can be recognized as equivalent or otherwise endorsed for use in the European Union.
Click here to obtain complimentary access to all the materials on the Cadwalader Cabinet LIBOR Topic Page. The page provides guidance on the sunset of LIBOR and the design of indices to replace it.
Commentary / Lary Stromfeld
This two-year extension is welcome relief and aligns the timing in the EU with the deadline for USD LIBOR announced by Andrew Bailey of the Financial Conduct Authority. It also provides more time to develop ESTER as the risk-free alternative rate in the EU. Global coordination is essential for a successful transition away from the IBOR benchmarks.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
