On February 21, the UK Financial Conduct Authority (FCA) published a speech by Megan Butler, the executive director of supervision—Investment, Wholesale and Specialists at the FCA, on firms’ progress in transitioning from the London Interbank Offered Rate (LIBOR) to overnight risk-free rates (RFRs).

The FCA and the UK Prudential Regulation Authority (PRA) are in the process of analyzing firms’ responses to their Dear CEO letter in which they requested a comprehensive assessment of the potential prudential and conduct impacts associated with the LIBOR transition being carried out (as reported in the September 28, 2018 edition of Corporate and Financial Weekly Digest).
Continue Reading

The Alternate Reference Rates Committee, operating under the auspices of the Federal Reserve, has published two consultations concerning the replacement of the London Inter-bank Offered Rate (LIBOR) in financial contracts. One consultation deals with floating rate notes and the other deals with syndicated business loans. The consultations contain draft fallback provisions for contracts referencing LIBOR that are intended to minimize disruption when the calculation of LIBOR, in its current form, is discontinued or the rate is no longer usable as a practical matter.
Continue Reading

On September 19, the UK Financial Conduct Authority (FCA) and UK Prudential Regulation Authority (PRA) published Dear CEO letters that they jointly sent to the chief executive officers (CEOs) of major banks and insurance companies regulated in the United Kingdom, regarding their preparations for the transition from the London Interbank Offered Rate (LIBOR) to alternative risk-free rates (RFRs).
Continue Reading

On July 12, the International Swaps and Derivatives Association (ISDA) published a document entitled Consultation on Certain Aspects of Fallbacks for Derivatives Referencing GBP LIBOR, CHF LIBOR, JPY LIBOR, TIBOR, Euroyen TIBOR and BBSW (Bank Bill Swap Rate) that is intended to solicit market input on how the derivatives markets can best create alternatives to the interbank offered rates (IBORs) currently referenced in derivatives transactions. This is one of many current market initiatives that are responding to the likelihood that many IBORs will cease to be published or cease to have appropriate liquidity after 2021 and must therefore be replaced by new benchmark rates based on the overnight risk-free rates (RFRs) that are being adopted for each major currency.
Continue Reading