The End of LIBOR….December 2021 – you think it is way off.?

Not really, given the amount of preparation needed and scope of impact…The interest rate benchmark LIBOR is expected to cease after end-2021.

No, it will, and Firms must transition to alternative rates before this date!

As well as banks and insurers, the discontinuation of LIBOR will affect many asset managers and other firms if they have not prepared for this event.

The London Interbank Offered Rate (LIBOR) is currently produced in 7 tenors (overnight/spot next, one week, one month, two months, three months, six months and 12 months) across 5 currencies. It is based on submissions provided by a panel of 20 banks. These submissions are intended to reflect the interest rate at which banks could borrow money on unsecured terms in wholesale markets. Both the FCA and the Bank of England’s Financial Policy Committee(link is external) (FPC) noted in 2017 that it had become increasingly apparent that the absence of active underlying markets and the scarcity of term unsecured deposit transactions raised serious questions about the future sustainability of the LIBOR benchmarks.In September 2018, we sent a joint Dear CEO letter with the PRA to major banks and insurers supervised in the UK, asking for the preparations and actions they are taking to manage the transition from LIBOR to alternative interest rate benchmarks. Based on the responses, the FCA have published a feedback statement to help inform firms’ planning for the cessation of LIBOR. (https://www.fca.org.uk/publication/feedback/feedback-on-dear-ceo-letter-on-libor-transition.pdf)

Encloseds the feedback statement received so far and makes interesting reading for those that are directly and indirectly involved – for a confidential discussion on this subject and more, please email me on jo.mart@btinternet.com

(Source FCA – United Kingdom )