FCA requires IBA to continue to publish synthetic US dollar LIBOR

Following 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.

Laura Wiles