Featured Product

    FCA Issues Update on Arrangements for Wind-Down of LIBOR

    September 29, 2021

    The Financial Conduct Authority (FCA) announced further arrangements for orderly wind-down of the London Inter-Bank Offered Rate (LIBOR) by the end of 2021. In specific, the sterling, Japanese yen, Swiss franc, and euro LIBOR panels are ceasing on December 31, 2021. FCA is confirming that to avoid disruption to legacy contracts that reference the one-, three-, and six-month sterling and JPY LIBOR settings. This will require the LIBOR benchmark administrator to publish these settings under a "synthetic" methodology, based on term risk-free rates, for the duration of 2022. These six LIBOR settings will be available only for use in some legacy contracts and not for use in new business. FCA also published a consultation paper (CP21/29) on the its proposed decision on which legacy contracts can use these synthetic LIBOR rates. The comment period for this consultation ends on October 20, 2021.

    The ICE Benchmark Administration publishes 35 LIBOR settings covering sterling, US dollar, Japanese yen, Swiss franc, and euro. As set out in the FCA’s March 05 announcement, publication of 24 of these settings will cease at the end of 2021. FCA published notices confirming its decisions to compel the continued publication of the remaining six sterling and Japanese yen LIBOR settings for a limited time period after the end of 2021, using a "synthetic" methodology. This is to help ensure an orderly wind-down. The synthetic rate has been chosen by FCA to provide a reasonable and fair approximation of what panel bank LIBOR might have been in the future. The synthetic rates will no longer, however, be representative as defined in the Benchmarks Regulation (BMR). FCA has confirmed the methodology it will require LIBOR’s administrator to use for calculating these "synthetic" rates, following its consultation proposals, as:

    • forward-looking term versions of the relevant risk-free rate (that is, the ICE Term SONIA Reference Rates provided by ICE Benchmark Administration for sterling and the Tokyo Term Risk Free Rates (TORF) provided by QUICK Benchmarks Inc, adjusted to be on a 360-day count basis, for Japanese yen), plus
    • the respective ISDA fixed spread adjustment (that is published for the purpose of ISDA’s IBOR Fallbacks for the six LIBOR settings)

    These six LIBOR settings will become permanently unrepresentative of their underlying markets from January 01 2022. The first non-representative publication under their "synthetic" methodology will be on January 04, 2022. FCA will decide and specify before year-end which legacy contracts are permitted to use these synthetic LIBOR rates. FCA will confirm its final decision on permitted legacy use as soon as practicable after the consultation closes. The decisions to require publication of some sterling and Japanese yen LIBOR settings on a synthetic basis are not determinative of any future decisions in respect of US dollar LIBOR from the end of June 2023.

     

    Related Links

    Comment Due Date: October 20, 2021

    Keywords: Europe, UK, Banking, LIBOR, Benchmark Reforms, Legacy Contracts, IBOR, Synthetic Methodology, FCA

    Related Articles
    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
    News

    MFSA Publishes CRD5 Updates and Supervisory Priorities for 2022

    The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.

    January 13, 2022 WebPage Regulatory News
    News

    HKMA Extends Repayment for Trade Facilities, Consults on Crypto-Assets

    The Hong Kong Monetary Authority (HKMA) published a circular, along with the reporting form and instructions, for self-assessment, by authorized institutions, of compliance with the Code of Banking Practice 2021.

    January 12, 2022 WebPage Regulatory News
    News

    FCA Registers Securitization Repositories; PRA Issues 2022 Priorities

    The Financial Conduct Authority (FCA) decided to register European DataWarehouse Ltd and SecRep Limited as securitization repositories under the UK Securitization Regulation, with effect from January 17, 2022.

    January 12, 2022 WebPage Regulatory News
    News

    EC Regulation Sets Out Methods for Measuring K-Factors Under IFR

    The European Commission (EC) published the Delegated Regulation 2022/25, which supplements the Investment Firms Regulation (IFR or Regulation 2019/2033) with respect to the regulatory technical standards specifying the methods for measuring the K-factors referred to in Article 15 of the IFR.

    January 11, 2022 WebPage Regulatory News
    News

    BIS Studies How Platform Models Impact Financial Stability & Inclusion

    The Bank of International Settlements (BIS) published a paper that assesses the ways in which platform-based business models can affect financial inclusion, competition, financial stability and consumer protection.

    January 10, 2022 WebPage Regulatory News
    News

    CBE Issues Additional Measures to Ease Disruptions from Pandemic

    The Central Bank of Egypt (CBE) published a circular with instructions on emergency liquidity assistance to banks that are unable to meet their liquidity requirements.

    January 10, 2022 WebPage Regulatory News
    News

    ESAs Publish List of Financial Conglomerates for 2021

    The European Supervisory Authorities (ESAs) published the list of identified financial conglomerates for 2021.

    January 07, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 7868