The Financial Conduct Authority published a feedback statement (FS21/12) on responses to its proposal to use the Article 23C and Article 21A powers under the Benchmarks Regulation, or BMR, for certain LIBOR settings. FS21/12 will interest users of the six LIBOR settings (the one-, three-, and six-month sterling and JPY LIBOR settings) that will move to a synthetic methodology from January 01, 2022 as well as the users of the continuing USD LIBOR settings whether these users are regulated or unregulated. FCA also published a technical Notice to ensure that the decision to allow legacy use of the synthetic sterling and JPY LIBOR settings comes into effect at the same time as the overall ban on use.
FCA had, in September 2021, published a consultation on its decision to use these new powers under the Benchmarks Regulation. The consultation sought views on the proposed decisions on whether and how to permit legacy use of 1-, 3-, and 6-month sterling and JPY LIBOR from January 01, 2022. The consultation also sought views on proposed decisions on whether and how to prohibit new use of overnight one-, three-, six-, and twelve-month USD LIBOR. FCA received 42 responses from banks, asset managers, trade bodies, and law firms, with most respondents from the UK and some from abroad. Overall, respondents agreed with both the proposals. On November 16, 2021, following a review and consideration of responses to the consultation, FCA published a Notice setting out its decision under Article 21A, a draft Notice setting out its decision under Article 23C, and the reasons for these notices in line with the relevant requirements under the Benchmarks Regulation. FCA decided to permit all legacy use of the six synthetic LIBOR settings by supervised entities other than in cleared derivatives (whether directly or indirectly cleared); it also decided to prohibit new use of the continuing USD LIBOR settings by supervised entities, with certain exceptions. FS21/12 provides more details of the feedback FCA received and its response. FS21/12 notes that following the feedback, FCA has made one adjustment to its approach on fallbacks. FCA also added an Annex to its Notice setting out the decision to provide further detail on the exceptions to the restriction on new use. FCA will publish the final Notice under Article 23C on January 01, 2022, in line with the draft Notice published in November.
Keywords: Europe, UK, Banking, Securities, Legacy Contracts, LIBOR, Benchmark Reforms, Benchmarks Regulation, Synthetic LIBOR, Fallbacks, Derivatives, FCA
Previous ArticleESMA Publishes 2021 ESEF XBRL Taxonomy Files and Conformance Suite
The Australian Prudential Regulation Authority (APRA) has published the findings of its latest climate risk self-assessment survey conducted across the banking, insurance, and superannuation industries.
The French Prudential Supervisory Authority (ACPR) published a notice related to the methods for calculating and publishing prudential ratios under the Capital Requirements Directive (CRD IV) and the minimum requirement for own funds and eligible liabilities (MREL).
The Financial Stability Institute (FSI) of the Bank for International Settlements recently published a paper proposing a framework for classifying financial stability regulation as either entity-based or activity-based.
The European Insurance and Occupational Pension Authority (EIOPA) published the risk dashboard based on Solvency II data and the final version of the application guidance on climate change materiality assessments and climate change scenarios in the Own Risk and Solvency Assessment (ORSA).
The European Banking Authority (EBA) and the European Central Bank (ECB) published their responses to the consultations of the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG) on sustainability-related disclosure standards.
A Consultative Group on Risk Management (CGRM) at the Bank for International Settlements (BIS) published a report that examines incorporation of climate risks into the international reserve management framework.
The European Banking Authority (EBA) published the final guidelines on liquidity requirements exemption for investment firms, updated version of its 5.2 filing rules document for supervisory reporting, and Single Rulebook Question and Answer (Q&A) updates in July 2022.
The European Insurance and Occupational Pensions Authority (EIOPA) published Version 2.8.0 of the Solvency II data point model (DPM) and XBRL taxonomy.
The European Union published, in the Official Journal of the European Union, an opinion from the European Economic and Social Committee (EESC); the opinion is on the proposal for a regulation to amend the Capital Requirements Regulation (CRR).
HM Treasury published a draft statutory instrument titled “The Financial Services (Miscellaneous Amendments) (EU Exit) Regulations 2022,” along with the related explanatory memorandum and impact assessment.