FCA Announces Dates For LIBOR Cessation

On March 5, 2021, the UK Financial Conduct Authority ("FCA") announced the dates by which panel banks' submissions for any London Inter-Bank Offered Rate ("LIBOR") will stop and LIBOR will no longer be representative.

The LIBOR settings will either cease to be provided by any administrator or no longer be representative after the following dates:

• in the case of all sterling, euro, Swiss franc and Japanese yen settings, and in the case of the one-week and two-month U.S. dollar settings, immediately after December 31, 2021; and
• in the case of the remaining U.S. dollar settings, immediately after June 30, 2023.

Separately, the Intercontinental Exchange ("ICE") Benchmark Administration published a feedback statement on its consultation relating to its intention to cease publication of various LIBOR settings.

In response to the FCA announcement, the Alternative Reference Rates Committee ("ARRC") stated that the announcements constitute a "Benchmark Transition Event" with respect to all USD LIBOR settings pursuant to ARRC-recommended fallback language. In addition, ISDA issued a statement that an "Index Cessation Event" had occurred, for purposes of Supplement 70 to the 2006 ISDA Definitions and the ISDA 2020 IBOR Fallbacks Protocol, for all 35 LIBOR settings. (ISDA also issued guidance on how the terms of the ISDA 2020 IBOR Fallbacks Protocol and the IBOR Fallbacks Supplement will apply to the FCA announcement.) Bloomberg confirmed that the announcements triggered a "Spread Adjustment Fixing Date" under its rulebook and published the relevant fixed spread adjustments.

The FCA indicated that it will consult, in the second quarter of 2021, on using proposed new powers under the Benchmarks Regulation (or "BMR") to address contracts that are difficult to amend prior to LIBOR's publication ceasing. The FCA also said that it will consult with the ICE Benchmark Administration on using proposed new powers under the Financial Services Bill to continue publishing synthetic, non-representative versions of one-month, three-month and six-month sterling LIBOR after the end of 2021 and for one-month, three-month and six-month yen LIBOR for an additional year after the end of 2021. Additionally, the FCA will consider whether the ICE Benchmark Association should be required to publish one-month, three-month and six-month USD LIBOR on a synthetic basis beyond June 2023. The FCA said that it does not anticipate the LIBOR settings becoming unrepresentative prior to the above dates.

Primary Sources

1. FCA Press Release: Announcements on the End of LIBOR
2. FCA Announcement on Future Cessation and Loss of Representativeness of the LIBOR Benchmarks
3. ISDA Press Release: ISDA Statement on UK FCA LIBOR Announcement
4. ISDA Guide: FCA Announcement on Future Cessation and Loss of Representativeness of the LIBOR Benchmarks
5. Bloomberg Technical Notice: Spread Fixing Event for LIBOR
6. ARRC Press Release: ARRC Commends Decisions Outlining the Definitive Endgame for LIBOR
7. SFA Press Release: LIBOR Cessation Dates Officially Announced

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