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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
Tuesday, March 9, 2021
On March 5, 2021, in a series of highly coordinated cross-border announcements, regulators on both sides of the Atlantic announced the future cessation of various London Interbank Offered Rates (
LIBOR) rates. These announcements were further augmented by statements issued by various industry groups such as LSTA and ISDA as well as the LIBOR administrator.
The bottom line is that for USD LIBOR, the one-day, one-month, six-month and one-year LIBOR rates will cease publication in June 2023. Meanwhile, the one- and two-week USD LIBOR rates will cease publication as of Dec. 31, 2021, although a synthetic rate may be available for legacy contracts after this date. Notwithstanding the June 2023 date, the U.S. banking regulators have previously advised that new financial contracts may not utilize LIBOR after Dec. 31, 2021.
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