On July 28, ISDA and the Global Foreign Exchange Division of the Global Financial Markets Association responded to the European Commission’s (EC) consultation on the need to exempt spot foreign exchange (FX) benchmarks under Article 18a of the EU Benchmarks Regulation (BMR). The consultation recommends applying the exemption to four currencies on the basis that their use in the EU either exceeds (Indian rupee, South Korean won, Taiwanese new dollar) or is very close to (Philippine peso) the significant benchmark threshold based on traded volume data provided by EU supervised entities. These four currencies meet the specific criteria identified in Article 18a – namely that, as restricted currencies, there is no suitable alternative benchmark produced in the EU and they are used on a frequent, systematic and regular basis by end users to hedge their currency exposures. As part of the data analysis exercise undertaken for the consultation response, other non-central bank administered benchmarks that are not or do not expect to be authorized for use in the EU were considered but the data indicated their use in the EU is not significant. The joint response has received formal support from the European Association of Corporate Treasurers and the Deutsches Aktieninstitut.
Documents (1) for ISDA Response to EC on Exemption of Spot FX Benchmarks from BMR
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