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Chapter 8 Contractual recognition of resolution stay powers

Closed
11 August 2020

8.1 Under the new Article 71a, BRRDII introduces a requirement for in scope entities to include a contractual term within financial contracts governed by third-country law, recognising that the contract may be subject to the exercise of resolution powers by the resolution authority to suspend the firm's payment or delivery obligations, or to suspend a counterparty's termination or security enforcement rights.

8.2 Where an entity does not include the contractual term, this should not prevent the resolution authority from applying their moratorium powers to suspend payment or delivery obligations or applying their powers to restrict the enforcement of security instruments, or suspend termination rights.

8.3 States subject to the BRRD may also require that parent undertakings ensure that their third-country subsidiaries include, within relevant financial contracts, terms to mandate that they cannot engage in early termination, suspension, modification, netting, the exercise of set-off rig

Comparing proposed amendment...