EU BMR Review/Libor – Legislation published in Official Journal

The final text of the review of the EU Benchmarks Regulation (BMR) has been published in the Official journal of the EU and will enter into force on 13 February 2021 – see link.

This includes the mechanism for a statutory fallback for Libor, the exemption for FX spot benchmarks, and the clarification that legacy OTC trades will not become subject to the clearing/margining requirements under EMIR when being changed as part of the reference rate transition.

All provisions will all apply from the 13 February 2021.

The publication of the legal text paves the way for the European Commission to start the process of secondary legislation to operationalise the statutory replacement rates for LIBOR contracts and the designation of exempted FX spot rates.

Latest Expectations of Implementation Timing

• H1 2021 – EC consultation on Libor replacement rates (tbc) – contingent on Libor cessation announcement.
• Q4 2021 latest – EC Implementing Act designating replacement rates
• By 31 Dec 2022 – EC consultation on list of exempted FX spot rates
• By 15 Jun 2023 – EC Delegated Act designating list of exempted FX spot rates
• 31 Dec 2023 – Current end transitional period for 3rd country benchmarks (extendable one additional time to 31 Dec 2025)