Minutes of the London FXJSC Legal Sub-Committee Meeting - 24 June 2025

Minutes

Minute 1: Introduction

The Chair (Sharon Blackman) opened the meeting, welcoming those online and in person.

Minute 2: Minutes

The minutes of the meeting of 5 March 2025 were approved.

Minute 3: ISDA to discuss updates to Definitions

Presented by: Jonathan Martin – ISDA

Background

• ISDA initiated a market participant survey in 2023 to assess the need for updates to the FX Definitions.
• A four-year strategy was launched to produce a consolidated, digital set of FX Definitions, compatible with Financial products Markup Language (FpML) and Common Domain Model (CDM).
• Final drafting is expected in 2025, with market implementation by end of 2027.
• Updates will be published digitally via ISDA’s MyLibrary platform.

Drafting Phase Highlights

2024 Work Recap:

• Non-Deliverable Disruption Events: Price Source Disruption remains the default event, but its definition has changed from ‘impossibility to obtain a rate’ standard to a ‘rate not being available to participants of the relevant foreign exchange market’.
• Offshore Deliverable CNY: Most of the work related to deliverable offshore CNY disruption events and fallbacks has been completed. Illiquidity has been removed as a trigger and Inconvertibility and Non-Transferability are retained.
• Deliverable Disruption Events: Feedback being gathered for broader application.
• Novation Provisions: Enhancements based on Novation Protocol feedback.

2025 Key Focus Areas:

• Finalising deliverable disruption events and EMTA Template Terms consolidation.
• Updates to Calculation Agent provisions and Business Day Definitions.
• Addressing unexpected holidays via Portfolio Correction mechanisms.
• Finalising the proposal to update FX novation provisions.
• Targeting publication of revised FX Definitions by year-end.

Implementation Timeline

• 2025: ISDA to launch implementation plan and engage infrastructure providers/stakeholders; and market participants to stand up resources for upcoming implementation
• 2026: Final Definitions submitted to SWIFT; market education and infrastructure updates begin.
• 2027: Full adoption; by November, all cleared and new non-cleared FX transactions to reference the new Definitions.

Minute 4: Amendments to the EU Benchmarks Regulation: Third-Country FX Spot Developments

Presented by: Ferdisha Snagg and George Bumpus - Cleary Gottlieb Steen & Hamilton LLP

Key Updates to the EU Benchmarks Regulation

• Regulation (EU) 2025/914: Amends the EU Benchmarks Regulation ‘as regards the scope of the rules for benchmarks, the use in the Union of benchmarks provided by an administrator located in a third country, and certain reporting requirements’.
• The new rules apply from 1 January 2026.
  • Scope Reduction: Only ‘significant’ and ‘critical’ benchmarks remain fully in scope. ‘Non-significant’ benchmarks are generally excluded.
  • Definitions:
    • Significant benchmarks: over EUR 50bn average use within the EU over a 6-month period or designated by a competent authority/ESMA where there are no substitutes and, if it became unreliable or ceased, it would have a significant and adverse impact; or where an EU administrator otherwise requests that its benchmark be designated significant, provided the benchmark has a total average value of at least EUR 20bn.
    • Critical benchmarks: over EUR 500bn or over EUR 400bn with no substitutes and have a significant and adverse impact if it ceased to exist or became unreliable (no change to the existing definition).
  • Third-Country Benchmarks: Can be used if deemed equivalent, recognised, or endorsed. Fewer benchmarks will require these designations due to reduced scope.
  • Transitional Use: All third-country benchmarks may be used in the EU until 31 December 2025.

Article 18a Exemption – FX Spot Benchmarks

• On 1 January 2018, the main provisions of the EU Benchmarks Regulation came into effect. Under Article 51(5), third-country benchmarks not meeting EU compliance (via equivalence, recognition, or endorsement) were allowed continued use until 1 January 2020, later extended to 31 December 2021.
• Introduced in February 2021, Article 18a exemption was introduced, specifically for third-country FX spot benchmarks. The Article 51(5) transition period for third-country benchmarks was extended to 31 December 2023, due to low uptake of compliance mechanisms by third-country administrators.
• October 2023, the transitional period for the third-country benchmarks regime was further extended until 31 December 2025 by a Commission Delegated Regulation. The European Commission also issued a legislative proposal for amending the EU Benchmarks Regulation that proposed deleting Article 18a, suggesting that a risk-based approach focused on significant benchmarks could make the FX spot exemption unnecessary.
• May 2025: The final amending Regulation (EU) 2025/914 retains Article 18a, with some modifications:
  • The European Commission will be required to exempt third-country FX benchmarks that (i) reference a spot exchange rate of a third-country currency that is subject to currency controls, and (ii) are systemically important or have no equivalent EU alternative.
  • The European Commission launched a targeted consultation (until July) on Article 18a to aid the Commission in identifying spot FX benchmarks that meet the conditions set out in Article 18a.

Implementation Timeline

• The Commission must adopt implementing legislation establishing a list of exempt third-country spot FX benchmarks by 9 June 2026.
• Continued use of third-country FX spot benchmarks allowed until then.

UK Divergence

• UK Benchmarks Regulation does not include an Article 18a equivalent.
• UK transitional period for third-country benchmarks extended to 31 December 2030.

Minute 5: Any other business

The Members discussed future topics. As the ISDA Definitions are to be published in November it would be worth having a future update in September or November.

Attendees

Sharon Blackman (Chair) – Citigroup
Sian Campbell-Mayne – Goldman Sachs
Thomas Fairfax – Citigroup
Simon Goldsworthy – Deutsche Bank
David Harris – Financial Conduct Authority
Joanne Napleton – London Stock Exchange Group
Mayank Patel – Bank of America
Tamsin Rolls – JP Morgan Chase
Baljit Saini – NatWest
Rakesh Shah – Standard Chartered
Krisha Somaiya – UBS
Gaynor Wood – CLS

FXJSC Legal Sub-Committee Secretariat

Sakshi Gupta – Bank of England
Matthew Hartley – Bank of England
Carly Jones – Bank of England

Guest attendees

George Bumpus – Cleary Gottlieb Steen & Hamilton LLP
Jonathan Martin – ISDA
Ferdisha Snagg – Cleary Gottlieb Steen & Hamilton LLP

Apologies

Nimisha Kanabar – Morgan Stanley
Sunil Samani – XTX Markets
Harkamal Singh Atwal – HSBC
Rowland Stacey – Goldman Sachs (Represented by an alternate)