FCA consults on winding down ‘synthetic’ sterling LIBOR

FCA is consulting on winding down the 1, 3 and 6- month synthetic sterling LIBOR settings.

As a reminder, FCA, the BoE, other international regulators and industry working groups in the LIBOR currency jurisdictions, have been encouraging the transition away from LIBOR to alternative risk-free rates. In September 2021, FCA announced that it would compel the continued publication of the 1, 3 and 6-month sterling LIBOR settings for a limited time after end-2021, using a ‘synthetic’ methodology. FCA has confirmed that synthetic LIBOR is temporary.

For US dollar LIBOR, FCA still needs to assess whether the remaining settings can be wound down in an orderly fashion when the panel ends on 30 June 2023, and if not, whether a synthetic US dollar LIBOR rate might be appropriate for certain contracts that are not within scope of LIBOR-related federal legislation. As such, FCA is also seeking information on market participants’ exposure to US dollar LIBOR.

The consultation closes on 24 August 2022.


Harshil Patel