5-Mar-21
Non-Representative. “Synthetic” rate possible for a “further period” after end-June 2023.
Bullet 2: The announcements from the FCA and IBA were not unexpected and were the result of feedback from market participants.
The IBA feedback statement and the FCA announcement were anticipated as a result of a process by the IBA where it sought input from market participants regarding proposed end dates for certain settings for LIBOR.
The FCA announced in July of 2017 its intention that it would no longer be necessary to request or require banks to submit to LIBOR after December 31, 2021. Since that announcement, the FCA and other regulators and industry groups have advised market participants of the need to transition away from LIBOR by this date.
[co-author: Anna Lewis-Martinez]
On 5 March 2021, the UK’s Financial Conduct Authority (FCA) formally announced the dates for the cessation of all London Interbank Offered Rate (LIBOR) benchmark settings currently published by ICE Benchmark Administration (IBA). The FCA also confirmed that where a “synthetic” LIBOR is available after the cessation dates, the synthetic LIBOR will not in any event be considered to be representative as of the cessation dates. This is an important step towards the end of LIBOR, providing market participants with a fixed timeline for LIBOR’s cessation. The announcement also adds pressure on market participants to complete their transition plans by the end of 2021.
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On March 5, 2021, the ICE Benchmark Administration (IBA), UK
Financial Conduct Authority (FCA) and International Swaps and
Derivatives Association (ISDA) made important announcements
regarding the timelines of the cessations of the London Interbank
Offered Rate (LIBOR).
LIBOR cessation dates
The IBA, which administers LIBOR, confirmed in its feedback
statement on its consultation regarding the cessation of its
publication of LIBOR that the majority of LIBOR panel banks would
not be willing to contribute to LIBOR in the future and announced
that it will cease publishing the LIBOR rates described below, as
JPY LIBOR
GBP LIBOR
USD LIBOR
Overnight and 12 Months
‘Synthetic’ LIBOR
Under proposed amendments to the UK Benchmarks Regulation, the FCA would have the power to require the IBA to continue publishing LIBOR settings on a “synthetic” basis using a changed methodology. The FCA has indicated that synthetic LIBOR would be based on a forward-looking term rate version of the relevant risk-free rate plus a fixed spread adjustment calculated over the same period and in the same way as the spread adjustment implemented in the IBOR Fallbacks Supplement (Fallbacks Supplement) and the 2020 IBOR Fallbacks Protocol (Fallbacks Protocol). The FCA has advised the IBA that it has no intention of using its proposed new powers to require the IBA to continue publication of any LIBOR setting beyond the intended cessation dates. However, for the LIBOR settings included in the table below, the FCA has advised the IBA that it will consult on using its proposed new powers to require the IBA to c
Posted on 6910
Intercontinental Exchange, Inc. (NYSE:ICE), a leading operator of global exchanges and clearing houses and provider of mortgage technology, data and listings services, announced that ICE Benchmark Administration Limited (IBA), the authorized and regulated administrator of LIBOR
®, has today published a feedback statement for the consultation on its intention to cease the publication of LIBOR
® settings.
On December 4, 2020, following discussions with the Financial Conduct Authority (FCA) and other official sector bodies, and in accordance with procedures adopted pursuant to the UK Benchmarks Regulation, IBA published a consultation on its intention to cease the publication of:
(i) all GBP, EUR, CHF and JPY LIBOR settings, and the 1 Week and 2 Month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021; and