Intercontinental Exchange’s (ICE) Benchmark Administration (IBA), the authorised and regulated administrator of LIBOR, has provided an update on the cessation of US dollar LIBOR.
In April 2023, the UK Financial Conduct Authority (FCA) expressed its intention to compel IBA to continue publishing the 1-, 3- and 6-month ‘synthetic’ US dollar LIBOR settings using an unrepresentative ‘synthetic’ methodology until 30 September 2024.
Cessation of these three settings is expected to occur after this date, with the FCA stating that it has no intention to compel publication further.
The settings are not representative of the underlying market or economic reality. They are currently prohibited for use by supervised entities in the UK Benchmarks Regulation (BMR), subject to the FCA permitting use by UK supervised entities in legacy contracts other than cleared derivatives.
With three months until the settings are discontinued, LIBOR users should take appropriate legal and regulatory advice in all relevant jurisdictions to ensure their understanding of, and preparedness for, the impact of the cessation on them and their counterparties, ICE advised.
In a reminder notice, the FCA said: “Market participants with outstanding US dollar LIBOR exposures must make sure they are prepared for these remaining synthetic US dollar LIBOR settings to cease by the expected deadline.
“Parties to contracts still referencing US dollar LIBOR should be taking steps to transition to appropriate, robust reference rates, renegotiating with counterparties where necessary.”
©Markets Media Europe 2024
