The ACT consider the benchmark of EURIBOR to be very important to non-financial companies. Corporates need a reliable[1] interest rate benchmark not only for inclusion in business and financial contracts but also to forecast, manage and account for many business activities. Continuity of outstanding contracts is fundamental for the real economy and so any revisions to Euribor should not have the unintended consequence of frustrating existing contracts in whatever legal jurisdiction that may apply. Whilst EEMI state “there is no intention to change the Underlying Interest for Euribor, the ACT is of the view that moving from a rate on the morning of the setting to a whole of previous day VWAR is a fundamental change. The ACT also believe that there can be situations when expert judgement is needed when applying the core methodology. Judgement would be required in deciding to ignore transactions prior to an “event” – such as a change in official rates.
