On August 1, the Association for Financial Markets in Europe (AFME) published model clauses (Model Clauses) in relation to contractual “bail-in” requirements contained in the EU Bank Recovery and Resolution Directive (BRRD). The BRRD requires certain parties to include “bail-in” clauses in contracts that create eligible liabilities and are governed by laws outside of the European Union.
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On January 1, the Single Resolution Mechanism (SRM) became fully operational. The SRM implements the European Union Bank Recovery and Resolution Directive (BRRD). The SRM is designed to strengthen the resilience of the financial system and to assist in mitigating against future crises. The regulation underlying the SRM establishes the framework and procedures that member states of the European Union will be required to follow when a bank in their jurisdiction fails and requires resolution.
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On May 26, the UK Prudential Regulation Authority (PRA) published a consultation paper to require PRA-supervised firms covered by the EU Bank Resolution and Recovery Directive (BRRD) to include in their contractual agreements governed by third-country law an agreement by the relevant counterparty to subject itself to the general and temporary stay provisions of the BRRD as implemented under UK law. In particular, the BRRD provides for a general stay of a counterparty’s right to exercise any termination, suspension, modification, netting or set-off rights, or to obtain possession, exercise control or enforce any security over any property of a firm solely as a result of the exercise of a crisis prevention or crisis management measure taken pursuant to the BRRD, provided the firm continues to perform its obligations under the relevant contract. 
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