On 12 April 2023, the Bank of England (BoE) and the FCA published a statement on the cessation of the USD LIBOR panel, which will occur on 30 June 2023. The statement notes that the cessation date is less than 90 days away and sets out some reminders for firms as to the actions they should be taking to prepare.
To finalise the USD LIBOR transition, the BoE, the FCA and the Working Group on Sterling Risk-Free Reference Rates (of which the BoE and FCA are ex-officio members) encourage market participants to:
- Actively transition USD LIBOR contracts ahead of the cessation of the USD LIBOR panel.
- Ensure readiness for implementation of USD LIBOR fallbacks, including planned central counterparty (CCP) conversion events and operationalisation of the ISDA 2020 IBOR Fallbacks Protocol.
- Ensure they transition to the most robust risk-free rates (RFRs).
- Continue to actively transition any remaining legacy contracts from synthetic GBP LIBOR to SONIA.
A comment from the FCA’s CEO, Nikhil Rathi, confirms that the FCA will use its powers under the Benchmarks Regulation to lay out a clear path to cessation for the remaining USD LIBOR settings. End dates have now been announced for all LIBOR settings, and market participants should continue to actively transition legacy LIBOR contracts and not rely on synthetic rates, which are a temporary bridging tool. Market participants must select appropriate alternative rates in new contracts and include robust fallback arrangements moving forward.
