Emma RadmoreFCA has responded to the ICE Benchmark Administration (IBA) announcement on 30 November 2020 that it will consult in early December on its intention to cease US$ LIBOR. IBA intends that, subject to confirmation following its consultation, one week and two month US$ LIBOR settings will cease at end-2021, and that the US$ LIBOR panel will cease at end-June 2023. This follows IBA’s previous announcement to consult on its intention that the euro, sterling, Swiss franc and yen LIBOR panels would cease at end-2021.
FCA state that they welcome and support the extension by panel banks and IBA, together with the proposal to consult on a clear end date to the US$ LIBOR panel, following discussions with the US$ LIBOR panel banks. FCA also welcomes supervisory guidance in relation to limiting new use of US$ LIBOR after end-2021 from (amongst others) the Federal Reserve Board of Governors. FCA will coordinate with relevant authorities to consider whether and, if so, how most appropriately to limit new use of US$ LIBOR.
Under the Financial Services Bill introduced to Parliament on 21 October 2020 to amend the Benchmarks Regulation, FCA would receive new powers to prohibit new use by supervised entities in the UK of a critical benchmark (such as LIBOR currency-tenor settings) where a benchmark administrator has confirmed its intention that the benchmark will cease. FCA may exercise this power if it considers doing so protects consumers or market integrity. FCA plans to consult in Q2 2021 on its proposed policy approach to the use of this power and would not envisage using it before end-2021.