GBIC-response to the EU Commission's consultation on the statutory replacement of the three-month Swiss franc LIBOR
On 5 March 2021, the Financial Conduct Authority (FCA) announced the discontinuation of CHF, GBP, JPY, EUR and certain USD LIBOR benchmarks at the end of 2021. The EU Commission then initiated a consultation procedure and is now examining whether the legal requirements for the first-time use of the statutory replacement mechanism of the Benchmark Regulation (in relation to CHF LIBOR with a three-month maturity) are met.
The German Banking Industry Committee participated in the consultation process and expressly welcomes the initiative of the EU Commission to replace the 3-month CHF LIBOR by the 3-month SARON Compounded Rate plus a spread of 0.31 basispoints.
Nevertheless, GBIC is of the view that the EU Commission should also focus on other benchmarks such as USD LIBOR and EONIA. In addition, all legacy contracts should be covered by the implementing act, which were agreed on until the FCA was announcing the discontinuation of the CHF LIBOR. Furthermore, the spread adjustment should be fixed in the implementing act itself.