The FCA opened a consultation on 30 June seeking views on winding down the 1, 3 and 6-month synthetic sterling LIBOR settings and requesting information on market participants’ exposure to US dollar LIBOR.
Since 31 December 2021, publication of 24 LIBOR settings ended, leaving only five US dollar LIBOR settings continue to be calculated using panel bank submissions until the end of June 2023. Since that time, the FCA has required the LIBOR administrator to continue to publish the 1-, 3- and 6-month sterling and Japanese yen LIBOR settings on a synthetic (and unrepresentative) basis to give the holders of certain legacy contracts more time to complete transition. The FCA can continue to request publication of that synthetic rate for up to one year at a time, for a maximum period of 10 years whilst there is still a need for outstanding contracts that reference a particular LIBOR setting to transition to an alternative benchmark. The aim of the consultation is to help the FCA review whether continued publication of synthetic rates is required, and also to ask the market to comment on whether, in due course, a synthetic US dollar LIBOR rate might also be necessary and the size and nature of any exposures that market participants expect may remain by the end of June 2023.
Responses are sought by 24 August 2022 and stakeholders can find the consultation here:
CP22/11: Winding down ‘synthetic’ sterling LIBOR and US dollar LIBOR | FCA