Regulators publish joint statement on the end of LIBOR

The FCA, BoE and the Working Group on Sterling Risk-Free Reference Rates have issued a joint press release on the end of LIBOR.

On 30 September 2024, the remaining synthetic LIBOR settings were published for the final time. All 35 LIBOR settings have now permanently ceased. The regulators note that the transition away from LIBOR – once referenced in an estimated $400 trillion of financial contracts – to risk-free rates has made financial markets safer, more stable and fit for modern use.

Now that LIBOR has been phased out, the Working Group on Sterling Risk-Free Reference Rates has met its objective. Following agreement from its members, it will be wound down with effect from 1 October 2024.

Market participants are encouraged to:

• Continue to ensure they use the most robust rates for the relevant currency, such as SONIA for GBP and SOFR for USD; and
• Ensure their use of term risk-free reference rates is limited and remains consistent with relevant best practice guidance.

The regulators also warn against credit sensitive rates (CSRs) emerging as successor rates. They highlight that these rates are not suitable for widespread use as a benchmark, and in particular, the FCA and FPC have communicated that USD CSRs have the potential to reintroduce many of the financial stability risks associated with LIBOR.