Version in force , Modified +907 −282§
Amended by Regulation (EU) 2021/168 32021R0168 on EUR-Lex (external, EUR-Lex)
dates added to the text: 2021-02-13 · dates removed: 2021-02-11
Explanation, written by a model and checked against the cited text
The heading changes from a narrower reference to replacing interest rate benchmarks in legacy trades to a broader heading covering amendments to legacy contracts for the implementation of benchmark reforms.
The dates used as reference points in paragraphs 1 and 2 change from 11 February 2021 to 13 February 2021, and the scope of covered transactions widens from novations of non-centrally cleared OTC derivative contracts and transactions referring to interest rate benchmarks to amendments or novations of OTC derivative contracts not cleared by a CCP referring to any benchmark.
A new paragraph 3 is added listing three conditions that must be met for paragraphs 1 and 2 to apply, concerning necessity for benchmark replacement, preservation of economic substance or risk factor, and exclusion of unrelated contractual changes.
Cited: Art. 13a, v1 (external, EUR-Lex) · Art. 13a, v2 (external, EUR-Lex)
v1 is the previous version, v2 this one.
Text from EUR-Lex, before and after
Previous version, in force 11 February 2021 02012R0648-20210211 → this version, in force 13 February 2021 02012R0648-20210213
Article 13a
Replacement Amendments to legacy contracts for the purpose of interest rate benchmarks in legacy trades the implementation of benchmark reforms
1. Counterparties referred to in Article 11(3) may continue to apply the risk-management procedures referred to in Article 11(3) that they have in place at the date of application of this Regulation on 13 February 2021 in respect of non-centrally cleared OTC derivative contracts which are not cleared by a CCP and that are entered into or novated before the date on which the obligation to have risk-management procedures in place pursuant to Article 11(3) takes effect where, after 11 13 February 2021, those contracts are subsequently amended or novated for the sole purpose of replacing the interest rate a reference benchmark they are referring to or of introducing a fallback provisions provision in relation to any benchmark referenced in that benchmark. contract.
2. Transactions Contracts which are entered into or novated before the date on which the clearing obligation takes effect pursuant to Article 4 and which, after 11 13 February 2021, are subsequently amended or novated for the sole purpose of replacing the interest rate a reference benchmark they are referring to or of introducing a fallback provisions provision in relation to any benchmark referenced in that benchmark, contract, shall not, for that reason, become subject to the clearing obligation referred to in Article 4.3. Paragraphs 1 and 2 shall apply only to OTC derivative contracts the amendment or novation of which:
(a) is necessary for the purpose of replacing a benchmark in the context of benchmark reforms;
(b) does not change the economic substance or risk factor represented by the reference to a benchmark in such contract; and
(c) does not encompass other changes to any legal term of that contract that does not relate to the benchmark referenced and thus potentially amends the contract in a way that effectively requires it to be considered a new contract.