European Union Benchmarks Regulation Article 28.2 – Rabobank robust written plan
The below plan only applies insofar as no robust written plan for example in the form of any fallback language, at the time of publication of this plan or thereafter, is available in any relevant product (legal) documentation such as, for example and without limitation, (master) agreements, (base) prospectuses, final terms, confirmations and definitions.
This publication only serves to provide general background information, is indicative and subject to changes without (prior) notification, is not necessarily complete or correct and is not intended to provide any individual, legal or other advice.
The Benchmark Regulation EU 2016/1011 of the European Parliament and of the Council dated 8 June 2016 on indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds (as amended from time to time) (the BMR), imposes certain requirements on firms that provide, contribute to or use benchmarks (as defined in the BMR). The text of the BMR can be found on: https://ec.europa.eu/info/law/benchmarks-regulation-eu-2016-1011_en.
European Union supervised entities such as Coöperatieve Rabobank U.A. (CRUA) and supervised European Union legal entities in which CRUA has full control or a majority interest (capital interest or control (together Rabobank) is required to comply with the BMR, when relevant.
Article 28.2 of the BMR provides inter alia that:
European Union supervised entities that use benchmarks must produce and maintain robust written plan(s) setting out the actions to be taken in the event that one or more benchmarks materially change or cease to be provided. Where feasible and appropriate, such plan(s) shall nominate one or several alternative benchmark(s) that could be referenced to substitute the benchmark(s) no longer provided, indicating why such Benchmark(s) would be suitable alternative(s).
In case of a material change or cessation of a benchmark as described under the BMR, Rabobank may take the following steps, without limitation:
- determine the impact of such event and assess the consequences thereof; including, among others, analyse the existing documentation and products, determining the availability of existing fallback language deemed to constitute robust written plan, identify inconsistencies and potential breaches.
- risk assessment of any potential hedging mismatch.
- consider create a Benchmark Recovery Committee with internal stakeholders from various disciplines, supported if necessary by an expert pool.
The overall scope of the steps outlined above is to determine, if feasible and appropriate, a suitable and appropriate alternative benchmark or any other appropriate contingency measures for existing financial contracts, financial instruments and investment funds referencing such benchmark.
In addition, Rabobank may take into account the following factors, without limitations:
- instructions imposed by governments or regulators;
- guidance or solutions from relevant market association(s) (for example ISDA, ICMA, LMA)
- guidance and definitions;
- other accepted (local) market practice;
- capability of the new benchmark or appropriate contingency measure to be implemented without undue delay;
- transparency of the benchmark or appropriate contingency measure;
- availability of the benchmark from a price source;
- compliance with regulatory requirements (including registration with ESMA);
- capability of producing a single universal outcome (to avoid fragmentation and ensure consistency).