Update: benchmark rate transition. Information requests Dutch regulators

Previously, we reported on the benchmark rate transition and the uncertainties that exist in that regard and we provided an update on recent developments regarding the benchmark rate transition. Since then, there have been further developments in respect of the transition from inter bank offered rates (IBORs) to risk free rates (RFRs), which transition should be completed ultimately 1 January 2022. In this respect, we note that the Dutch regulators, the Dutch Central Bank (De Nederlandsche Bank (DNB)) and the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten (AFM)) announced on 30 June 2020 that they will request information regarding the transition to alternative benchmark rates from financial institutions on a semi-annually basis. The first request was made on 1 July 2020. It is contemplated that the last information request will be on 1 January 2022. With the information, DNB and AFM hope to get a better picture and more knowledge of the current status of the transition as effected by the relevant financial institutions. The information requests focusses on financial instruments in relation to which the future cashflows depend on the relevant benchmark rates and focusses on the transition itself. DNB and AFM emphasize that, despite the fact that 2022 seems to be a long way down the road, it is important for financial institutions to already start using the RFRs and to include the relevant fallback clauses in existing and future agreements and instruments. Moreover, DNB and AFM point out that an uncontrolled and/or an incomplete transition might result in increased risks.