Featured Product

    FCA Welcomes IBA Consultation to Cease Publication of LIBOR Settings

    December 11, 2020

    ICE Benchmark Administration Limited (IBA), the authorized and regulated administrator of LIBOR, has published a consultation on its intention to cease the publication of LIBOR settings. IBA intends that, subject to confirmation following its consultation, one-week and two-month USD LIBOR settings will cease at the end of 2021 and that the USD LIBOR panel will cease at end the of June 2023. The consultation is not, and must not be taken to be, an announcement that IBA will cease or continue the provision of any LIBOR settings after December 31, 2021 or June 30, 2023. The consultation is open for feedback until January 25, 2021. FCA welcomes and supports the extension by panel banks and IBA, together with the proposal to consult on a clear end-date to the USD LIBOR panel, following discussions with the USD LIBOR panel banks. This will incentivize swift transition, while allowing time to address a significant proportion of the legacy contracts that reference USD LIBOR.

    FCA also welcomes the supervisory guidance in relation to limiting new use of USD LIBOR after end-2021 from the FDIC, FED, and OCC. FCA will coordinate with the U.S. authorities, and relevant authorities in other jurisdictions, to consider whether and, if so, how most appropriately to limit new use of USD LIBOR, consistent with the objectives of protecting consumers and market integrity. Earlier, IBA had announced its intention to consult that the euro, sterling, Swiss franc, and yen LIBOR panels would cease at the end of 2021. In response to this IBA announcement, FCA issued a statement setting out its potential approach to ensure an orderly wind-down of LIBOR.

    Under the Financial Services Bill introduced to Parliament on October 21, 2020, to amend the Benchmarks Regulation, FCA would receive new powers to prohibit some or all new use by supervised entities in the UK of a critical benchmark (such as LIBOR currency-tenor settings) where a benchmark administrator has confirmed its intention that the benchmark will cease. FCA may exercise this power if it considers doing so protects consumers or market integrity. FCA is required to publish a Statement of Policy before exercising this power. FCA plans to consult in the first quarter of 2021 on its proposed policy approach to the use of the power to prohibit some or all new use. FCA's exercise of this power will be subject to the Financial Services Bill being enacted by Parliament, feedback to its upcoming policy proposals on how FCA may use this power, and any subsequent consultations on FCA decisions to use the power once the policy is finalized. FCA would not envisage using this power before the end of 2021. However, FCA expects that its proposals will include consideration of how the exercise of the power could best be coordinated with any measures being taken in other jurisdictions where a benchmark is heavily used, to support the overall effectiveness of the FCA policy. 

    FCA encourages market participants that are parties to legacy LIBOR contracts to continue work to convert these contracts or adopt robust fallbacks, for example, the IBOR Fallbacks Protocol produced by ISDA. FCA urges market participants to reach an agreement, where feasible, to transition away from LIBOR, as this is the only way for parties to have certainty and control over their contractual terms when LIBOR ceases or is no longer representative. On December 04, 2020, ISDA hosted a webinar with FCA, FED, and Chairman of the Alternative Reference Rates Committee to discuss the recent announcements on LIBOR, with a focus on USD LIBOR. The webinar also covered what the announcements mean for the market and what market participants should do next.

     

    Related Links

    Keywords: Americas, Europe, UK, US, Banking, Insurance, Securities, IBOR, LIBOR, Benchmark Reforms, Financial Services Bill, IBA, FCA

    Related Articles
    News

    ESAs Publish Reporting Templates for Financial Conglomerates

    ESAs published the final draft implementing technical standards on reporting of intra-group transactions and risk concentration of financial conglomerates subject to the supplementary supervision in EU.

    January 18, 2021 WebPage Regulatory News
    News

    EBA Publishes Report on Asset Encumbrance of Banks in EU

    EBA published the annual report on asset encumbrance of banks in EU.

    January 18, 2021 WebPage Regulatory News
    News

    US Agencies Publish Updates for Call Reports, FFIEC 101, and FR Y-9C

    FED updated the reporting form and instructions for the FR Y-9C report on consolidated financial statements for holding companies.

    January 15, 2021 WebPage Regulatory News
    News

    EBA Proposes Guidelines for Establishing Intermediate Parent Entities

    EBA issued a consultation paper on the guidelines on monitoring of the threshold and other procedural aspects of the establishment of intermediate EU parent undertakings, or IPUs, as laid down in the Capital Requirements Directive.

    January 15, 2021 WebPage Regulatory News
    News

    EC Adopts Financial Reporting Changes Arising from Benchmark Reforms

    EC published Regulation 2021/25 that addresses amendments related to the financial reporting consequences of replacement of the existing interest rate benchmarks with alternative reference rates.

    January 14, 2021 WebPage Regulatory News
    News

    BIS Bulletin Examines Key Elements of Policy Response to Cyber Risk

    BIS published a bulletin, or a note, that examines the cyber threat landscape in the context of the pandemic and discusses policies to reduce risks to financial stability.

    January 14, 2021 WebPage Regulatory News
    News

    HMT Updates List of Post-Brexit Equivalence Decisions in UK

    HM Treasury, also known as HMT, has updated the table containing the list of the equivalence decisions that came into effect in UK at the end of the transition period of its withdrawal from EU.

    January 14, 2021 WebPage Regulatory News
    News

    EBA Issues Erratum for Technical Package on Reporting Framework 3.0

    EBA published an erratum for technical package on phase 1 of the reporting framework 3.0.

    January 14, 2021 WebPage Regulatory News
    News

    APRA Publishes FAQ on Measurement of Credit Risk Weighted Assets

    APRA updated a frequently asked question (FAQ), for authorized deposit-taking institutions, on the measurement of credit risk weighted assets.

    January 14, 2021 WebPage Regulatory News
    News

    ECB Letter Sets Out Strategies to Address Issue of Nonperforming Loans

    ECB published a letter from Andrea Enria, the Chair of the Supervisory Board of ECB, answering questions raised by the President of the Bundestag (the German federal parliament) on how ECB assesses the financial stability of the euro area in the context of the significant level of nonperforming loans.

    January 14, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6452