Recommendation regarding a fallback rate for Stibor
In order to comply with the requirements, set out in Article 28 (2) of the Benchmark Regulation, companies under supervision in contracts must have a description of what happens if a reference rate used in financial contracts ceases permanently (fallback clause). This applies to contracts regarding financial instruments and contracts regarding consumer credit.
The Bankers' Association has produced a recommendation on how such a fallback clause can be formulated. The recommendation describes in which situations a change of reference interest rate is necessary and what fallback rate should be used. The recommendation is based on the standards that have been developed internationally in recent years. The recommendation is very generally held to be able to work for all types of markets, instruments and parties.
There are no plans for Stibor to cease, but the Bankers' Association's recommendation on interest rates for Stibor has been drawn up so that companies under supervision can live up to the requirements of the Benchmark Regulation in a manner that complies with international standards.
Stibor is administered by the Swedish Financial Benchmark Facility (SFBF). SFBF will submit an application for authorization to Finansinspektionen before the turn of the year in accordance with the requirements of the Benchmark Regulation.
This recommendation has been prepared by a working group within the Swedish Bankers' Association. In addition to the Banking Association's members, the Riksbank (central bank of Sweden) and Finansinspektionen (Swedish FSA) have participated in the working group as observers. Two consultations have been conducted regarding the recommendation. These consultations has meant that others than banks has influencied the final recommendation.