Benchmarks

Recent Articles

•  

  01.12.2022

  Synthetic LIBOR update: 3 month synthetic sterling LIBOR to cease end March 2024 and FCA consultation on synthetic US dollar LIBOR settings

  Our previous Law-Nows in July and October discussed the market consultation of the FCA earlier this year on the cessation of synthetic sterling LIBOR settings and its initial consideration of the potential publication of synthetic US dollar settings, and the FCA’s subsequent decision to permanently cease publication of the 1 month and 6 month synthetic LIBOR settings after 31 March 2023. See FCA consultation on synthetic LIBOR - cessation of sterling settings and potential publication of US dollar settings and 1 and 6 month synthetic sterling LIBOR settings to cease after 31 March 2023....

  Read more
•  

  27.07.2022

  FCA consultation on synthetic LIBOR - cessation of sterling settings and potential publication of US dollar settings

  Sterling In the sterling loan market, the FCA understands that the remaining sterling LIBOR syndicated loans have been more difficult to transition, particularly in the context of complex multi-currency, large syndicated loans. The FCA considers that the continued publication of synthetic LIBOR to end-March 2023 should be sufficient time for these remaining loans to transition. In relation to private finance initiative (PFI) loans, where local authority consent is also required, the FCA considers that the additional 15 months of synthetic LIBOR will have provided sufficient time for the relevant...

  Read more
•  

  05.03.2021

  LIBOR: the end is (formally) nigh

  The announcement constitutes a formal index cessation event for documentation including the ISDA IBOR Fallbacks Supplement and results in the credit adjustment spreads that will be applied to risk-free rates being fixed. As expected, IBA and the FCA have confirmed that most LIBORs will stop being published from 31 December. Overnight and 12-month US dollar LIBOR will stop being published from 30 June 2023. Under the Financial Services Bill currently before Parliament, the FCA would have power to designate, change the methodology of and compel publication of critical benchmarks. In today’s...

  Read more
•  

  16.02.2021

  Synthetic LIBOR and tough legacy contracts - FCA's enhanced powers

  On 21 October 2020 the UK Government introduced the Financial Services Bill to Parliament. This Bill includes amendments to the Benchmarks Regulation as it now forms part of UK domestic law (“UK BMR”), which provide the Financial Conduct Authority (“FCA”) with new and enhanced powers to oversee the orderly wind-down of benchmarks such as LIBOR. Under the proposed new Articles 23A and 23D, the FCA will be able to designate a benchmark as “critical”, direct a change in its methodology and extend its publication for a limited time period for the benefit of “tough...

  Read more
•  

  14.10.2020

  ISDA launches IBOR Fallbacks Supplement and Protocol: next steps and issues

  Background and analysis On 1 October 2020, ISDA received a positive business review letter from the US Department of Justice in relation to the proposals. ISDA has also discussed the proposals with other competition authorities, including the EU’s Directorate-General for Competition. Satisfied that no adverse action is anticipated in relation to the proposals, on 9 October 2020 ISDA announced the launch of the IBOR Fallbacks Supplement and the IBOR Fallbacks Protocol. The Working Group on Sterling Risk-Free Reference Rates has welcomed ISDA’s announcement and has encouraged early adherence...

  Read more
•  

  15.07.2020

  Synthetic LIBOR: a silver bullet?

  As part of its anticipated powers it is envisaged that the FCA could introduce a “synthetic LIBOR” by directing a methodology change and requiring publication on the same screen as LIBOR currently appears to ensure protection of consumers and market integrity. Leaving aside the economic and mathematical challenges of developing a synthetic LIBOR, one of the issues that will arise in this scenario is the extent to which market participants can use a synthetic LIBOR. The proposals do not mean that there is an end to or a relaxation of the current LIBOR transition flight path. In the...

  Read more