ESBG raises concerns in EBA consultation about retroactivity effects
>> See ESBG submission to consultation
BRUSSELS, 10 September 2020 – ESBG recently provided feedback to the European Banking Authority consultation on contractual recognition of stay powers under the bank recovery and resolution directive (BRRD).
These Regulatory Technical Standards (RTS) support the effective application of temporary restrictions on early termination rights (resolution stays) in relation to financial contracts governed by the law of a third country. The approach taken by the EBA raises several concerns, including key mandatory elements as proposed being too detailed and rigid, which might create too much burden on market participants without further improving the level of legal certainty.
ESBG also insists on the need to address the issue of retroactivity whereby new requirements should not have any retroactive effect on contractual recognition clauses for resolution stays already implemented in existing contractual relationships, namely legacy agreements. Finally, contractual recognition clauses should be submitted to the same governing law that also applies to the financial contract it relates to, instead of being necessarily governed by the laws of an EU jurisdiction.
>> See ESBG submission