Reform of money market benchmarks

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In recent years, with the aim of strengthening the integrity and representativeness of benchmark rates endangered by some cases of manipulation and by a significant decrease in trade on the unsecured interbank money market, a global reform process has gotten under way, which can be summarized as follows:

  • 2013: the G20 mandated the Financial Stability Board (FSB) to undertake a fundamental review of major benchmark rates, supporting market initiatives.
  • strengthening Interbank offered rates (IBORs), in particular by anchoring them to a greater number of transactions and improving the processes and controls around submissions.
  • identifying alternative near-risk free rates (RFRs).
  • 2016: the FSB mandated the International Swaps and Derivatives Association (ISDA) to participate in work to enhance the robustness of derivatives contracts referencing widely-used benchmarks.
  • 2016: In the European Union (EU), Regulation 2016/101 (Benchmark Regulation - BMR) defined the new legal framework for benchmark rates, adapting their calculation methodology to international principles.
  • 2017: the European Central Bank (ECB), together with the Financial Securities and Markets Authority (FSMA), the European Securities and Markets Authority (ESMA) and the European Commission, appointed a specially established private working group (Working Group on Risk Free Rates - WG RFR) to research and select an RFR for the euro area as a backstop for the EONIA and as a basis for fallback solutions for the Euro Interbank Offered Rate (EURIBOR).
  • 2019:
  • The ECB launched the publication of the €STR.
  • The European Money Markets Institute (EMMI) completed the reform of the EURIBOR Governance Framework, EURIBOR Code of Obligations of Panel Banks and the EURIBOR Benchmark Determination Methodology.
  • 2020-2021:
  • On July, the European Commission proposed to amend the Benchmark Regulation. Regulation (EU) 2021/168 amending Regulation EU 2016/1011 was published on 12 February 2021.
  • The WG RFR released two public consultations on fallback rates that can be relied on in the event that the main rate becomes unavailable (fallback provisions).