The FCA has issued a statement welcoming the Government’s intention to bring forward legislation to amend the Benchmarks Regulation (“BMR“) to give the FCA enhanced powers. The FCA says these could help manage and direct an orderly wind-down of critical benchmarks such as LIBOR, and help deal with the problem identified by the Sterling Risk Free Rate Working Group of ‘tough legacy’ contracts that cannot transition from LIBOR.
The new powers proposed will be available where the FCA has found that a critical benchmark is not representative of the market it seeks to measure and representativeness will not be restored. The FCA is clear that those who can amend their contracts so that they move away from LIBOR at or before this point, should do so.
The legislation would empower FCA to protect those who cannot amend their contracts in this way by directing the administrator of LIBOR to change the methodology used to compile the benchmark, if doing so would protect consumers and market integrity.
Further information on the proposed new powers can be found here.