Featured Product

    BoE and FCA Outline Next Steps for LIBOR Transition in 2020

    January 16, 2020

    BoE, FCA, and the Working Group on Sterling Risk-Free Reference Rates (RFRWG) have published a set of documents that outline the LIBOR transition priorities and milestones for 2020. The RFRWG has published a document on the 2020 priorities and milestones, a paper on the use cases of benchmark rates, lessons learned from recent conversions of legacy LIBOR contracts, and a factsheet titled "Calling time on LIBOR: Why you need to act now." Additionally, in December, a consultation was published on the approach to use to determine the credit adjustment spread for inclusion in sterling cash products referencing LIBOR. The comment period for this consultation closes on February 06, 2020.

    This is a critical year for LIBOR transition. As the Financial Policy Committee (FPC) of BoE set out in December 2019, while good progress has been made, firms need to accelerate efforts to ensure they are prepared for LIBOR cessation by the end of 2021. To help achieve this, the RFRWG has published its priorities and an updated roadmap for the year ahead to highlight important events and clarify actions market participants should take to reduce LIBOR exposure and transition to alternative rates, including:

    • Ceasing issuance of cash products linked to sterling LIBOR by the of end the third quarter of 2020
    • Throughout 2020, taking steps that demonstrate that compounded SONIA is easily accessible and usable
    • Taking steps to enable a further shift of volumes from LIBOR to SONIA in derivative markets
    • Establishing a framework for the transition of legacy LIBOR products, to significantly reduce the stock of LIBOR referencing contracts by the first quarter of 2021
    • Considering how best to address issues of “tough legacy” contracts 

    BoE and FCA support these objectives and have published two documents designed to further catalyze transition efforts:

    • First, a joint letter that has been sent to major banks and insurers, supervised in the UK. This letter sets out the initial expectations of FCA and PRA of firms’ transition progress during 2020, including in relation to the targets set by the RFRWG, and highlights the FPC’s close monitoring of the steps being taken.  
    • Second, a statement from BoE and FCA encouraging market makers to switch the convention for sterling interest rate swaps from LIBOR to SONIA on March 02, 2020. This is designed to help progress transition in the derivatives market.  

    These publications, along with an update in December, are a comprehensive suite of materials that support the priorities and milestones of RFRWG.  

    Related Links 

    Comment Due Date: February 06, 2020

    Keywords: Europe, UK, Banking, Insurance, Securities, Interest Rate Benchmark, LIBOR, SONIA, Risk-Free Rates, FCA, BoE

    Related Articles
    News

    HKMA Enhances Loan Guarantee Scheme to Alleviate Pressure on SMEs

    HKMA announced that enhancements will be made to the Special 100% Loan Guarantee of the SME Financing Guarantee Scheme (SFGS) and the application period will be extended to December 31, 2021.

    February 24, 2021 WebPage Regulatory News
    News

    EBA Proposes Standards for Supervisory Cooperation Under IFD

    EBA launched consultations on the regulatory and implementing technical standards on cooperation and information exchange between competent authorities involved in prudential supervision of investment firms.

    February 24, 2021 WebPage Regulatory News
    News

    BoE Sets Out Plan to Transform Data Collection from Financial Sector

    BoE has set out a three-phased plan to transform data collection from the UK financial sector over the next decade.

    February 23, 2021 WebPage Regulatory News
    News

    BIS Issues Updates on Technology Initiatives on Cross-Border Payments

    BIS recently made a couple of announcements with respect to the planned and ongoing work in the area of financial technology.

    February 23, 2021 WebPage Regulatory News
    News

    ESRB Updates List of Macro-Prudential Measures in February 2021

    ESRB updated the list of national macro-prudential measures applied by each member state in the European Economic Area.

    February 22, 2021 WebPage Regulatory News
    News

    BoE Survey Shows Positive COVID Impact on Outsourced Banking Services

    BoE has set out results of a survey on the impact of COVID-19 events on the use of machine learning and data science.

    February 22, 2021 WebPage Regulatory News
    News

    ECB Issues Opinion on Proposal to Regulate Crypto-Asset Markets in EU

    In response to a request from the European Council and Parliament, ECB published an opinion on the proposed regulation on markets in crypto-assets.

    February 22, 2021 WebPage Regulatory News
    News

    APRA Announces Aggregate Committed Liquidity Facility for Banks

    APRA announced the updated aggregate amounts for the 2021 Committed Liquidity Facility (CLF) established between the Reserve Bank of Australia (RBA) and certain locally incorporated authorized deposit-taking institutions that are subject to the Liquidity Coverage Ratio (LCR).

    February 19, 2021 WebPage Regulatory News
    News

    ECB and UK Authorities Agree on Post-Brexit Supervisory Cooperation

    ECB published supervisory Memorandums of Understanding (MoUs) with UK as well as other European and non-European authorities.

    February 19, 2021 WebPage Regulatory News
    News

    EIOPA Outlines Strategic Supervisory Priorities for Insurance Sector

    EIOPA identified business model sustainability and adequate product design as the two EU-wide strategic supervisory priorities.

    February 19, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6619