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Janine Alexander
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A refresher on the key announcements made in the LIBOR transition world during Q1 of 2021
FCA announcement on future cessation and loss of representativeness of the LIBOR benchmarks
In March this year, the FCA confirmed that all 35 LIBOR settings will either cease to be published by the ICE Benchmark Administration and/or will no longer be representative following these dates:
| Date | Cessation and/or lack of representativeness |
| 31 December 2021 |
|
| 30 June 2023 |
|
The FCA says it will still consult about the possibility of requiring the IBA to publish a form of “synthetic” LIBOR in the following tenors:
- GBP LIBOR: 1-month, 3-month and 6-month.
- USD LIBOR: 1-month, 3-month and 6-month.
- JPY LIBOR: 1-month, 3-month and 6-month.
No forward-looking overnight rate this year?
The Alternative Reference Rates Committee (ARRC) announced in March that it will not be in a position to recommend any forward-looking Secured Overnight Financing Rate (SOFR) term rate by mid-2021.
In its announcement, ARRC encouraged market participants to continue to the transition away from LIBOR using tools available now.
Bank of England and FCA recommend SONIA from 11 May
The Bank of England announced in March that it and the FCA “support and encourage liquidity providers in the sterling non-linear derivatives market to adopt new quoting conventions for inter-dealer trading based on SONIA instead of LIBOR from 11 May this year.”
This is to support market participants in meeting a key milestone set by the Working Group on Sterling Risk-Free Reference Rates: To cease initiating new GBP LIBOR-linked non-linear derivatives that expire after 2021 by the end of Q2 2021.
20 April 2021
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Article contributors
Janine
AlexanderPartner
Specialising in Banking & financial disputes, Commercial arbitration and Commercial disputesJean-Martin
LouwAssociate
Specialising in Commercial disputes and Banking & financial disputes
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