Featured Product

    FCA Welcomes IBA Consultation to Cease Publication of LIBOR Settings

    December 11, 2020

    ICE Benchmark Administration Limited (IBA), the authorized and regulated administrator of LIBOR, has published a consultation on its intention to cease the publication of LIBOR settings. IBA intends that, subject to confirmation following its consultation, one-week and two-month USD LIBOR settings will cease at the end of 2021 and that the USD LIBOR panel will cease at end the of June 2023. The consultation is not, and must not be taken to be, an announcement that IBA will cease or continue the provision of any LIBOR settings after December 31, 2021 or June 30, 2023. The consultation is open for feedback until January 25, 2021. FCA welcomes and supports the extension by panel banks and IBA, together with the proposal to consult on a clear end-date to the USD LIBOR panel, following discussions with the USD LIBOR panel banks. This will incentivize swift transition, while allowing time to address a significant proportion of the legacy contracts that reference USD LIBOR.

    FCA also welcomes the supervisory guidance in relation to limiting new use of USD LIBOR after end-2021 from the FDIC, FED, and OCC. FCA will coordinate with the U.S. authorities, and relevant authorities in other jurisdictions, to consider whether and, if so, how most appropriately to limit new use of USD LIBOR, consistent with the objectives of protecting consumers and market integrity. Earlier, IBA had announced its intention to consult that the euro, sterling, Swiss franc, and yen LIBOR panels would cease at the end of 2021. In response to this IBA announcement, FCA issued a statement setting out its potential approach to ensure an orderly wind-down of LIBOR.

    Under the Financial Services Bill introduced to Parliament on October 21, 2020, to amend the Benchmarks Regulation, FCA would receive new powers to prohibit some or all new use by supervised entities in the UK of a critical benchmark (such as LIBOR currency-tenor settings) where a benchmark administrator has confirmed its intention that the benchmark will cease. FCA may exercise this power if it considers doing so protects consumers or market integrity. FCA is required to publish a Statement of Policy before exercising this power. FCA plans to consult in the first quarter of 2021 on its proposed policy approach to the use of the power to prohibit some or all new use. FCA's exercise of this power will be subject to the Financial Services Bill being enacted by Parliament, feedback to its upcoming policy proposals on how FCA may use this power, and any subsequent consultations on FCA decisions to use the power once the policy is finalized. FCA would not envisage using this power before the end of 2021. However, FCA expects that its proposals will include consideration of how the exercise of the power could best be coordinated with any measures being taken in other jurisdictions where a benchmark is heavily used, to support the overall effectiveness of the FCA policy. 

    FCA encourages market participants that are parties to legacy LIBOR contracts to continue work to convert these contracts or adopt robust fallbacks, for example, the IBOR Fallbacks Protocol produced by ISDA. FCA urges market participants to reach an agreement, where feasible, to transition away from LIBOR, as this is the only way for parties to have certainty and control over their contractual terms when LIBOR ceases or is no longer representative. On December 04, 2020, ISDA hosted a webinar with FCA, FED, and Chairman of the Alternative Reference Rates Committee to discuss the recent announcements on LIBOR, with a focus on USD LIBOR. The webinar also covered what the announcements mean for the market and what market participants should do next.

     

    Related Links

    Keywords: Americas, Europe, UK, US, Banking, Insurance, Securities, IBOR, LIBOR, Benchmark Reforms, Financial Services Bill, IBA, FCA

    Related Articles
    News

    APRA Penalizes Heritage Bank for Incorrect Reporting of Capital

    The Australian Prudential Regulation Authority (APRA) found that Heritage Bank Limited had incorrectly reported capital because of weaknesses in operational risk and compliance frameworks, although the bank did not breach minimum prudential capital ratios at any point and remains well-capitalized.

    November 29, 2021 WebPage Regulatory News
    News

    OSFI Releases Annual Report 2021-2022

    The Office of the Superintendent of Financial Institutions (OSFI) released the annual report for 2020-2021.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Capital Adequacy Standards for Banks

    The Australian Prudential Regulation Authority (APRA) published, along with a summary of its response to the consultation feedback, an information paper that summarizes the finalized capital framework that is in line with the internationally agreed Basel III requirements for banks.

    November 29, 2021 WebPage Regulatory News
    News

    CPMI-IOSCO Seek Comments on Access to Central Clearing and Portability

    The Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) issued a consultative report focusing on access to central counterparty (CCP) clearing and client-position portability.

    November 29, 2021 WebPage Regulatory News
    News

    APRA Finalizes Guidance on Management of Climate Change Risks

    The Australian Prudential Regulation Authority (APRA) released the final Prudential Practice Guide on management of climate change financial risks (CPG 229) for banks, insurers, and superannuation trustees.

    November 26, 2021 WebPage Regulatory News
    News

    EBA Publishes Single Rulebook Q&A Updates in November 2021

    The European Banking Authority (EBA) Single Rulebook Question and Answer (Q&A) tool updates for this month include answers to 10 questions.

    November 26, 2021 WebPage Regulatory News
    News

    EC Finalizes Rules on Internal Approaches Benchmarking Exercise

    The European Commission, or EC, finalized the Implementing Regulation 2021/2017 with respect to the benchmark portfolios, reporting templates, and reporting instructions for the supervisory benchmarking of internal approaches for calculating own funds requirements.

    November 26, 2021 WebPage Regulatory News
    News

    EC Proposes New Measures Under Capital Markets Union Package

    The European Commission (EC) has adopted a package of measures related to the Capital Markets Union.

    November 25, 2021 WebPage Regulatory News
    News

    European Council Adopts Position on Digital Finance Package Proposals

    The European Council adopted its position on two proposals that are part of the digital finance package adopted by the European Commission in September 2020, with one of the proposals involving the regulation on markets in crypto-assets (MiCA) and the other involving the Digital Operational Resilience Act (DORA).

    November 25, 2021 WebPage Regulatory News
    News

    PRA Proposes Rulebook Changes; BoE Extends BEEDS Testing Window

    The Prudential Regulation Authority (PRA) is proposing, via the consultation paper CP21/21, to apply group provisions in the Operational Resilience Part of the PRA Rulebook (relevant for the Capital Requirements Regulation or CRR firms) to holding companies.

    November 25, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7740