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    FCA Consults on Winding Down LIBOR, Issues Data Strategy Update

    June 30, 2022

    The Financial Conduct Authority (FCA) is seeking views on winding down the one-, three- and six-month synthetic sterling LIBOR settings, along with the information on market participants’ exposure to USD LIBOR. The feedback period to this consultation ends on August 24, 2022. Moreover FCA published a summary of the CryptoSprint events it held in May and June 2022 as well as published an update on its data strategy, which sets out the progress so far as well as the future focus areas.

    Consultation on LIBOR. This consultation seeks views on progress toward completing the transition away from the one-, three- and six-month sterling LIBOR settings. Market participants have informed FCA that they would value having a period of notice before the cessation of synthetic sterling LIBOR. To ensure adequate notice, FCA is seeking views on ceasing the requirement to continue publication of the one-, three- and six-month sterling LIBOR settings at the end of March 2023, instead of at end‑December 2022. FCA is also seeking views on when it will be possible for the three-month sterling LIBOR setting to cease in an orderly fashion. The consultation also seeks information related to USD LIBOR, wherein FCA wants to understand the size and nature of the remaining exposures where transition is not already provided for either by the contract or by legislation, and market participants’ plans to transition these exposures before the end of June 2023. FCA is seeking views on any challenges or issues that might result from the publication of any USD LIBOR settings on a synthetic basis. As conveyed earlier, FCA will consider the case for requiring continued publication, on a synthetic basis, of the one-, three- and six-month USD LIBOR settings. However, FCA also clarified that market participants should not rely on a synthetic USD LIBOR rate being available after June 30, 2023. As a next step, FCA will review its decisions to compel continued publication of the one-, three- and six-month sterling LIBOR settings and notify the market of the outcome. In due course, FCA will also assess whether it should require continued publication of USD LIBOR on a synthetic basis when the US dollar LIBOR panel ends.

    Data strategy update. FCA had set out its vision for the use of data and analytics at FCA in January 2020. This data strategy update sets out where the Authority has made progress, where more needs to be done, and where focus has increased. Overall, FCA has made significant progress in developing its technology, data services, and improving how it uses analytics and insights to support decision-making. So far, FCA has migrated its physical data center to a cloud-based service; developed a Data Lake to store all FCA data; implemented Analytics tools such as data visualization applications, reporting tools, and dashboards; implemented a new Decision Hub; and migrated 52,000 firms from Gabriel to the new data collection platform RegData. FCA has also put in place a "Single View" analytics tool to provide a "one stop shop" of key data and indicators about each firm and provide context for decisions on risks and where to intervene. FCA is continuing to modernize its enterprise architecture to a cloud-based system, with strengthened security and operational resiliency. FCA also plans to continue to collaborate with the Bank of England and industry to standardize how information is reported to FCA and to demonstrate how FCA can use new technology to reduce the cost of reporting with a commitment to deliver these initiatives in 2023. Another key initiative of FCA involves finding the right balance to achieving outcomes in a compliant and proportionate way, ensuring FCA meets the legal, policy, and ethical challenges to the sharing of data.

     

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    Keywords: Europe, UK, Banking, Securities, LIBOR, Data Strategy, Regtech, Crypto-Assets, Reporting, Basel, Benchmark Reforms, Suptech, FCA, BoE

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