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Code of Conduct
Introduction
The Euribor® Code of Conduct was drawn up by the European Banking Federation
(FBE), the Financial Markets Association (ACI), the European Savings Banks
Group and the European Association of Cooperative Banks. It was approved
by the European banking industry on 15 December 1997.
The Code of Conduct stipulates the rules that apply to Euribor®
and to the Panel Banks. It ensures transparent and efficient management
of the panel of banks.
A Steering Committee , composed of nine recognized
market practitioners and the Secretary General of the FBE, oversees the
compliance with the Code of Conduct and monitors market developments.
Code of Conduct
Euribor® - CODE OF CONDUCT
(hereafter "the Code")
PREFACE
The Euro Interbank Offered Rate - "Euribor®" - is the new money
market reference rate for the euro. This Code lays down the rules applicable
to Euribor® and the banks which will quote for the establishment of Euribor®.
Euribor® is the rate at which euro interbank term deposits are being offered
within the EMU zone by one prime bank to another at 11.00 a.m. Brussels
time ("the best price between the best banks"). It is quoted
for spot value (two Target days) and on actual / 360 day basis.
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ARTICLE 1 CRITERIA TO QUALIFY FOR AND STAY ON THE
Euribor® PANEL
1. Banks can qualify for the panel (hereafter "panel banks")
if they are active players in the euro money markets in the euro-zone
or worldwide and if they are able to handle good volumes in euro-interest
rate related instruments, especially in the money market, even in turbulent
market conditions. When considering an application, only consolidated
figures are accepted; moreover, internal operations within non-consolidated
networks will be excluded if market conditions are not applied to such
operations.
2. More specifically, the following items will be considered:
On-balance sheet interbank items:
Assets |
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Loans up to one year |
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Money market paper (e.g. Certificate
of Deposits and Commercial Paper) |
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Reverse repurchase agreements |
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Liabilities |
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Deposits up to one year |
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Money market paper (e.g. Certificate
of Deposits and Commercial Paper) |
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Repurchase agreements |
and, to a lesser extent, the following:
Off-balance sheet
items: |
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Derivatives referring to a Euribor®
underlying denominated in the currencies of countries participating
in EMU (OTC and exchange traded) |
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Foreign exchange swaps (one leg
in EMU-countries' currencies) |
3. Panel banks must be banks of first class credit standing,
high ethical standards and enjoying an excellent reputation.
4. Banks wishing to apply for a seat on the panel must disclose all relevant
information on the items considered for the selection. As a matter of
convenience, the applicants could turn in the quarterly figures notified
to the national central banks/ European Central Bank.
5. The information mentioned above will be treated by the Steering Committee,
as defined in Article 7, on a strictly confidential basis.
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ARTICLE 2: NUMBER OF PANEL BANKS
The number of panel banks will be both high enough to reflect faithfully
the geographic diversity of the still segmented money market in the euro
zone and low enough to ensure an efficient manageable panel consisting
of prime banks only.
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ARTICLE 3: START-UP NUMBER OF PANEL BANKS
In the start-up phase the number of panel banks as chosen in conformity
with Article 1 will include:
1. a limited number of EU banks per EMU country as set out in the attached
table (Annex 1) and chosen by the national
banking community of the respective EMU country.
2. six prime international banks from non-EU countries but active in the
EMU zone on an invitation to join the panel extended by the Steering Committee.
3. up to four banks from EU countries as long as these countries do not
participate in EMU, if the euro activities of these banks are comparable
to those of the other panel banks on the proposal of the respective national
banking community with the approval of the Steering Committee.
Rules to apply to the international banks from non-EU countries and the
banks from EU countries which do not participate in EMU from the outset
are attached and form an integral part of this Code (Annex
2).
Banks belonging to the same group can only quote under one national quota.
The Steering Committee will control the list of banks submitted by the
national banking communities in order to ensure the strict application
of this rule. An exception to this rule is only possible if otherwise
a country would not be adequately represented on the panel.
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ARTICLE 4: REVIEW OF THE PANEL
After the start-up phase of one year, the list of the panel banks will
be periodically reviewed by the Steering Committee to ensure that the
selected panel always truly reflects money market activities within the
euro zone in accordance with the criteria laid down in Article 1. At this
time, national quotas as set out in the table referred to in Article 3
will no longer be applied but consideration will also be given to the
geographic diversity of the origins of panel banks and to a supportive
attitude towards Euribor®.
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ARTICLE 5: INITIAL ROTATION SYSTEMS
If, for compelling reasons, in the start-up phase, the banking community
of a country participating in EMU needs more seats on the panel than allocated
to it in the table referred to in Article 3, it may temporarily resort
to a rotation system where banks alternate on the panel. Some restrictions
apply to this possibility. These restrictions are laid down in the attached
"Rules on rotation" which form an integral part of this Code
(Annex 3).
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ARTICLE 6: OBLIGATIONS OF PANEL BANKS
1. Panel banks must quote the required euro rates:
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to the best of their knowledge,
these rates being defined as the rates at which euro interbank term
deposits are being offered within the EMU zone by one prime bank
to another at 11.00 a.m. Brussels time ("the best price between
the best banks") |
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for the complete range of maturities
as indicated by the Steering Committee |
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on time as indicated by the screen
service provider |
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daily except on Saturdays, Sundays
and Target holidays |
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accurately with two digits behind
the comma |
2. Panel banks must commit themselves to transmit to
the European System of Central Banks all the necessary figures to establish
an effective overnight euro rate, and in particular their aggregate loan
volume and the weighted average interest rate applied.
3. Panel banks must make the necessary organisational arrangements to
ensure that delivery of the rates is possible on a permanent basis without
interruption due to human or technical failure.
4. Panel banks must take all other measures which may be reasonably required
by the Steering Committee or the screen service provider in the future
to establish Euribor®.
5. Panel banks must subject themselves unconditionally to this Code and
its Annexes, in their present or future form.
6. Panel banks must promote as much as possible Euribor® (e.g. use Euribor®
as reference rate as much as possible) and refrain from any activity damageable
to Euribor®.
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ARTICLE 7: STEERING COMMITTEE
Euribor® FBE and Euribor® ACI, two international associations under Belgian
law, will create a Steering Committee as referred to in this Code.
The Steering Committee will consist of 10 members, 7 from the Euribor®
FBE side, 3 from the Euribor® ACI side. The members must be experienced
market practitioners, i.e. people who are directly involved in market
operations (money markets, FX markets, interest rate derivatives) or who
bear direct responsibility in their bank for it. The Secretary General
of the European Banking Federation will be a permanent member of the Steering
Committee under the Euribor® FBE quota. The other members have a mandate
of 2 years. This mandate is renewable. All the members must be independent
and not subject to instructions from the companies or organisations to
which they belong.
The members of the Steering Committee shall be directly appointed and
revoked by the General Assemblies of Euribor® FBE and Euribor® ACI under
the rules laid down in their respective Articles of Association. Each
association appoints and revokes the members of its side independently.
In case a member is revoked, or stops being a member for any other reason
before the expiry of his mandate, he or she may be replaced by another
member from the same association.
Each member has one vote. Decisions in the Steering Committee will be
taken by a simple majority of the votes of the members present at meetings.
In case of a tie vote, the Secretary General of the European Banking Federation
has a casting vote. A decision to exclude a bank from the panel or admit
a new bank to the panel must be taken by a qualified majority of seven
votes.
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ARTICLE 8: TASKS AND RIGHTS OF THE STEERING COMMITTEE
The Steering Committee may at any time request panel banks to demonstrate
and prove that their relevant market activities (see Article 1) still
qualify them for a seat on the panel.
The Steering Committee also reviews, in accordance with Article 4, new
applications for a seat on the panel and may remove a bank from the panel
if the criteria laid down in Article 1 are no longer met.
The Steering Committee will also periodically review whether, in the light
of market development, a reduction of the number of panel banks is warranted
and whether the justification for a rotation system in one country is
still given.
The Steering Committee will also control whether the panel banks fulfil
their obligations under this Code.
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ARTICLE 9: SANCTIONS
The Steering Committee may take the following sanctions if panel banks
do not comply with the obligations under this Code:
issuance of a warning
to remedy the situation quickly
if such warning is
ignored, exclusion of a panel bank from the panel
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ARTICLE 10: PROCEDURAL RULES
Before the Steering Committee takes a decision, it gives the parties concerned
the opportunity to expose their opinion. If the Steering Committee decides
to remove a bank from the panel, it will provide a written explanation
for such decision to the bank concerned.
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ARTICLE 11: AMENDMENTS
Euribor® FBE and Euribor® ACI can decide jointly to amend this Code, whenever
such a request is brought before them by at least one half of the members
of the Steering Committee.
Amendments to this Code are not subject to the approval of the panel banks.
Panel banks are, of course, free to leave the panel if they do not wish
to abide by the amended Code.
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Annex 1
This Annex, dated 15th of December 1997, consisted of a table
that fixed for a one-year start-up period the quota of Panel Banks per
country.
The composition of the panel has been (and still is) periodically reviewed
following the initial one year period, taking into account the applicable
eligibility criteria.
The current composition of the panel of reporting banks is available on
the Panel Banks page of this Website.
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Annex 2
This Annex, dated 15th of December 1997, lays down the
rules applicable to the international banks of third countries which participate
in the panel, as well as the banks from the EU countries that do not participate
in EMU from the outset.
The current composition of the panel of reporting banks is available on
the Panel Banks page of this Website.
RULES TO APPLY TO THE INTERNATIONAL BANKS FROM NON-EU
COUNTRIES AND THE BANKS FROM EU COUNTRIES WHICH DO NOT PARTICIPATE IN
EMU FROM THE OUTSET (HEREAFTER "THE INTERNATIONAL BANKS")
1. NUMBER OF INTERNATIONAL BANKS
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The number of international banks
from non-EU countries will be six. |
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If certain EU countries do not
participate in EMU from the outset, the number of international
banks may be increased from six to ten. The definitive decision
on the number of international banks to be invited by the Steering
Committee (as referred to in Article 7 of the Code of Conduct) to
join the panel (between a minimum of six and a maximum of ten) will
depend on the number of EU countries not participating in EMU from
the outset. |
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If an EU country does not participate
in EMU from the outset, banks with their head office in those countries
may be part of the group of international banks, but rotation is
not possible (see Annex 3 of the Code of Conduct on the rules of
rotation). |
2. CHOICE
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The international banks (between
six and ten, as explained above), will be chosen amongst banks on
the basis of their market activity, together with the banks of the
euro zone (which according to an agreed table will be 58 if all
EU countries participate in EMU from the outset). |
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The international banks from non-EU
countries will be approached, and chosen, directly by the Steering
Committee. |
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Banks from EU countries not participating
in EMU from the outset will be approached, and chosen, by their
respective national banking associations with the approval of the
Steering Committee. |
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Applicant banks with their head
office in EU countries not participating in EMU from the outset
will be required to qualify, and their market activities will be
compared to this end to the market activity of the other applicant
banks from EU countries not participating in EMU from the outset,
prior to a decision being taken on which banks are to be accepted. |
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The choice of the international
banks will be made in June 1998 at the latest on the basis of the
1997 balance sheet figures, as well as on the basis of market data. |
3. CRITERIA TO QUALIFY FOR THE Euribor® PANEL
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The international banks must be
able to handle good volumes in euro-interest related instruments,
especially in the money market, even in turbulent market conditions.
They also must have at least one establishment (branch or subsidiary)
in one country of the euro zone. |
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Basically, the Steering Committee
will consider interbank transactions in euro worldwide. When considering
an application, only consolidated figures are accepted; moreover,
internal operations within non-consolidated networks will be excluded
if market conditions are not applied to such operations. |
|
More specifically, the following
items will be considered: |
On-balance sheet interbank items:
Assets |
|
Loans up to one year |
|
Money market paper (e.g. Certificate
of Deposits and Commercial Paper) |
|
Reverse repurchase agreements |
|
Liabilities |
|
Deposits up to one year |
|
Money market paper (e.g. Certificate
of Deposits and Commercial Paper) |
|
Repurchase agreements |
and, to a lesser extent, the following:
Off-balance sheet
items:
|
|
Derivatives referring to a Euribor®
underlying denominated in the currencies of countries participating
in EMU (OTC and exchange-traded) |
|
Foreign exchange swaps (one leg
in EMU-countries' currencies) |
|
The international banks must be
banks of first class credit standing, high ethical standards and
enjoying an excellent reputation |
4. OBLIGATIONS OF THE REFERENCE BANKS
The international banks will subject themselves unconditionally to the
Code of Conduct; especially, they shall fulfil the obligations as stipulated
in the Code of Conduct for panel banks.
5. EVIDENCE OF ACTIVITY IN EURO BEFORE 1999
Before the launching of the euro on 1 January 1999, the international
banks interested, in order to assess their market activity, will be invited
to give details of their volume (assets and liabilities separately) of
money market transactions in EMU currencies up to one year. The figures
should be based on the most recent audited balance sheet available. As
a matter of convenience, the applicants could turn in the quarterly figures
notified to the national central banks / European Central Bank.
6. EXCLUSION FROM THE GROUP OF INTERNATIONAL BANKS
AND PROCEDURAL RULES
In the light of the development of activities in the euro money markets,
the Steering Committee will review regularly the list of international
banks. Before the Steering Committee takes a decision, it gives the parties
concerned the opportunity to expose their opinion. If the Steering Committee
decides to remove a bank from the panel, it will provide a written explanation
for such decision to the bank concerned.
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Annex 3
This Annex, dated 15th of December 1997, laid down the rules applicable
to the rotation of banks under the national quota system.
Following a decision made by the Steering Committee on 12 December 2001,
the rotation systems have been discontinued as of January 1st, 2002.
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In addition, none of the Parties can in any way be held liable or responsible for the content of any Website linked to this Website.
EURIBOR is a trade mark registered in the name of Euribor - Fédération Bancaire Européenne. EURIBOR refers to the Euro interbank offered rate. All rights are reserved.
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