On 20 April 2021, the FICC Markets Standards Board (FMSB) published a new Spotlight Review on LIBOR transition, looking at how market participants may manage potential conduct risks arising in back book transition. Back book transition covers long-dated derivative contracts and the need for parties to them to take steps before the end of 2021 to remove their remaining reliance on LIBOR benchmarks.

The Spotlight Review builds on, and should be read in conjunction with, the first series of ‘LIBOR transition – Case studies for navigating conduct risks’ published by FMSB in June 2020 which focused on moving new business off LIBOR. This paper examines certain risks to market fairness and effectiveness that might arise when transitioning existing LIBOR-based contracts with maturities extending beyond end-2021 to alternative risk-free rates.