Featured Product

    Regulatory Agencies in UK and US Issue Updates on LIBOR Transition

    July 21, 2021

    The Bank of England (BoE) and the Financial Conduct Authority (FCA) support and encourage liquidity providers in the LIBOR cross-currency swaps market to adopt new quoting conventions for interdealer trading based on risk-free rates, instead of LIBOR, from September 21, 2021. This is to facilitate a further shift in market liquidity toward risk-free rates, bringing benefits for a wide range of users as they move away from LIBOR. Additionally, on July 13, 2021, the Market Risk Advisory Committee (MRAC) of the U.S. Commodity Futures Trading Commission (CFTC) formally recommended a series of "SOFR First" initiatives in USD markets, beginning with interdealer swap markets on July 26, 2021. The MRAC recommendation also includes a subsequent step to replace use of LIBOR with risk-free rates in cross-currency swaps, identifying a potential date of September 21, 2021.

    To support markets in building the necessary liquidity to meet the set milestones, BoE and FCA have encouraged UK market participants to support the US-led "SOFR First" initiative and have been engaged with authorities across LIBOR jurisdictions to build the necessary consensus around the subsequent initiative for cross-currency swaps in September. Support for this has been also expressed publicly by the U.S. Alternative Reference Rates Committee and the National Working Group on Swiss Franc Reference Rates. Thus, FCA has engaged with UK market participants, including liquidity providers and interdealer brokers, to determine support for a change in the quoting conventions of LIBOR cross-currency swaps in the interdealer market on the proposed date of September 21, 2021. An FCA survey of UK market participants identified strong support for a change in the interdealer quoting convention, which would see risk-free rates rather than LIBOR become the default price from September 21, 2021. Thus, BoE and FCA support and encourage all participants in the LIBOR cross-currency swaps market to take the steps necessary to prepare for and implement these changes to market conventions on and shift liquidity away from LIBOR to risk-free rates. In the period leading up to September 21, 2021, BoE and FCA will continue to engage with market participants and relevant international authorities to determine whether market conditions allow the switch to proceed smoothly.

     

    Related LinkNews Release

     

    Keywords: Europe, UK, Banking, LIBOR, Risk-Free Rates, SOFR, Interest Rate Benchmarks, Cross Currency Swaps, Benchmark Reforms, FCA, BoE, CFTC

    Related Articles
    News

    OSFI Issues Results of Pilot on Climate Risk Scenario Analysis

    The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.

    January 20, 2022 WebPage Regulatory News
    News

    EC Issues Regulation on Adjustments to K-Factor Coefficients Under IFR

    The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).

    January 20, 2022 WebPage Regulatory News
    News

    ECB Issues Opinions on Green Bonds Standard and CRR Proposals

    The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.

    January 19, 2022 WebPage Regulatory News
    News

    ESRB Explores Policy Response to Risks Arising from Digitalization

    The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.

    January 18, 2022 WebPage Regulatory News
    News

    HKMA Consults on FIRO Code, Revises Policy on Foreign Exchange Risk

    The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.

    January 18, 2022 WebPage Regulatory News
    News

    FI Publishes Multiple Regulatory and Reporting Updates

    The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.

    January 17, 2022 WebPage Regulatory News
    News

    EU Authorities Address COVID-19 Reporting, MCD, and PSD2 Issues

    The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.

    January 17, 2022 WebPage Regulatory News
    News

    BSP Tackles Aspects of Lending and Islamic, Open & Sustainable Finance

    The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.

    January 16, 2022 WebPage Regulatory News
    News

    US Agencies Issue Regulatory Updates, FDIC Launches Tech Sprint

    The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.

    January 13, 2022 WebPage Regulatory News
    News

    EBA Issues Guide on Bank Resolvability, Consults on Transferability

    The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).

    January 13, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7903