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LIBOR transition

LIBOR transition

The Financial Conduct Authority (FCA) has served final notice on UK firms setting out its expectations that they will fully transition from their once broad and deep use of LIBOR. At the end of 2021, LIBOR ceased, or ceased to be a representative benchmark, in most currency-tenor settings. Only liquid tenors of USD LIBOR are to continue to mid 2023 – to allow legacy contracts which reference them to run-off. Also for legacy contracts, a "synthetic" GBP and JPY LIBOR is being published for liquid tenors on a time limited basis.

We are monitoring developments closely, including industry trends and product documentation initiatives, through our LIBOR working group. We are advising a variety of clients on the LIBOR transition, and wider reform (which touches interbank offered rates (IBORs) and other interest rate benchmarks): in relation to both regulatory and transactional matters; and in relation to both legacy exposure and new business using risk-free rates (RFRs). Our digital solution, Vantage, combines cutting-edge AI and related technology with our lawyers’ broad and deep expertise in this area.

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Featured articles

LIBOR transition hedging closer

As LIBOR transition efforts race to the finish line for some settings on 31 December 2021, one question remains consistently implacable: how to transition hedged cash products and their related swaps at the same time and to the same destination?

Legislating for the LIBOR transition: synthetic LIBOR for tough legacy contracts

With less than four months to go before the FCA turns off the supply of daily LIBOR (in its well-used form) for most of the 35 currency-tenor settings (see The coming end of LIBOR), the UK Government has introduced the Critical Benchmarks (References and Administrators’ Liability) Bill to the House of Lords.

Beyond LIBOR: transatlantic divergence in loan markets

A recent FT Alphaville article considers the state of play in the ongoing transition from LIBOR and usefully focuses on the market impacts. For those contending with varying degrees of regulatory pressure to move their business to alternative rates, the "on the ground" realities of the transition continue to be challenging.