LIBOR transition roadmap update

It's been just over one year since FCA CEO Andrew Bailey’s speech on the ‘Future of LIBOR’ alerted markets to the viability of the world’s most widely-used benchmark. In that time, supervisors, administrators, global standard-setting bodies, industry organisations and market participants have struggled to gauge the level of effort required to plan for transition. In the absence of a coordinated strategy, financial institutions and corporates alike have been forced to parse mixed messages on the degree of urgency.

Within a four-day period, the FCA, FSB, ISDA and the Sterling Risk-Free Reference Rate Working Group made a series of important public statements (three on the same day), significantly advancing the roadmap to transition away from LIBOR by end-2021.

What does this mean for Treasurers?

In the most unequivocal statement from a regulator to date, the FCA urges market participants including both corporates and financial institutions to:

  • quicken the pace of transition away from LIBOR
  • use alternative risk free reference rates in new contracts  
  • draw down the stock of legacy instruments referencing LIBOR
  • carefully consider regulatory implications of continuing to issue instruments linked to LIBOR.

Collectively, the other reports and consultation papers offer substantive information on the post-LIBOR infrastructure, providing global users with replacement rates and fallback language needed to implement detailed change programmes.

Want to know more?

Please click here to view our latest Hot Topic update detailing the publications and offering our recommendations on what firms should be doing now to prepare for the transition. Also take a look at PwC's LIBOR website for further information.