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LIBOR transition

LIBOR transition

The Financial Conduct Authority (FCA) has served final notice on UK firms setting out its expectations on the transition away from LIBOR. The FCA has made it clear that the Covid-19 pandemic has not altered its requirement that firms continue their momentum towards a full transition away from LIBOR by the end of 2021, when LIBOR will cease, or cease 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).

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 transition: in relation to both regulatory and transactional matters; and in relation to both legacy LIBOR 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.