On 15 October 2021, the FCA published a new webpage listing questions and answers for firms related to the use of its powers under the UK Benchmarks Regulation (BMR), and publications on 29 September 2021, to help manage an orderly wind-down of LIBOR.
The following are key questions covered on the webpage:
Impact on contract provisions
Will pre-cessation fallbacks (those who trigger on unrepresentativeness) still operate if the FCA permits wide legacy use of synthetic sterling and yen LIBOR?
Will my cessation fallbacks still be triggered given there is going to be a ‘synthetic’ LIBOR for some sterling and yen settings?
Use of synthetic LIBOR after the end of 2021
What if I’m planning to transition my customers (or have already transitioned them) to an alternative rate, given my contract might be able to use synthetic LIBOR? Will it still be considered that I’ve treated my customers fairly?
Why has the FCA proposed a wide permission for legacy use of synthetic sterling and yen LIBOR, when messaging from the authorities has always been clear that firms should actively transition or insert fallbacks wherever practicable?
Implementing synthetic LIBOR
How does the synthetic LIBOR solution interact with other jurisdictions’ legislative solutions?
What do the 29th September publications mean for US dollar LIBOR?
Why is a synthetic rate not a representative rate?