Laura WilesFollowing its November 2022 consultation, FCA has decided to require LIBOR’s administrator, ICE Benchmark Administration Limited (IBA) to continue to publish the 1, 3 and 6 month US dollar LIBOR settings on a synthetic basis for a short period after 30 June 2023 (when the US dollar LIBOR panel is due to cease), until end‑September 2024.
FCA promises to publish a detailed Feedback Statement later in Q2 2023.
FCA recommends firms continue to actively transition contracts that reference US dollar LIBOR – firms will be expected to take action and deliver demonstrable progress in line with the Dear CEO letter it published in March 2021.
FCA will also:
- Require IBA to calculate the 1, 3 and 6 month synthetic US dollar LIBOR settings using the relevant CME Term SOFR Reference Rate plus the respective ISDA fixed spread adjustment;
- Permit the use of the 1, 3 and 6 month synthetic US dollar LIBOR settings in all legacy contracts except cleared derivatives;
- Prohibit all new use of synthetic US dollar LIBOR under the Benchmarks Regulation from 1 July 2023. This will override the exemptions to the prohibition on new use that FCA imposed on 1 January 2022, and these exemptions will therefore cease when the US dollar LIBOR panel ends.