FCA Annual Report and Accounts 2018/19
The Financial Conduct Authority (FCA) has published its Annual Report and Accounts, which look back at its main areas of focus over 2018/19, including the UK's withdrawal from the EU and sector and cross-sector priorities.
LIBOR: preparing for the end - FCA speech
The FCA has published a speech by Andrew Bailey, Chief Executive of the FCA, given at the Securities Industry and Financial Markets Association's (SIFMA) LIBOR Transition Briefing in New York. In his speech, Mr Bailey gives an update on the progress of the transition away from London Inter-bank Offered Rate (LIBOR) to Secured Overnight Financing Rate (SOFR), Sterling Overnight Index Average (SONIA) and the other chosen risk-free rates.
Mr Bailey states that:
- there has been good progress on the transition from LIBOR across derivatives and securities markets. A transition in loan markets is a key next step;
- UK lenders will need to begin engaging with borrowers about lending based on these rates - customers should expect their banks to contact them;
- the FCA expects the LIBOR panels to dwindle or disappear after end-2021. Therefore, firms must be able to run their business without LIBOR from this date, and reduce the stock of "legacy" LIBOR contracts.
Mr Bailey emphasises that the base case assumption should be that there will be no LIBOR publication after 2021.
"Even if LIBOR does continue for a further period after end-2021, it would have changed. There is a high probability it will no longer pass regulatory tests of representativeness. Markets for LIBOR-related contracts are likely to have become highly illiquid. It may not be usable in new contracts. The ability to hedge outstanding LIBOR obligations and claims is likely to have been impaired. The future for those still on LIBOR will be more uncertain than ever. Transition – and transition comfortably before end-2021 – is a better choice."
Gabriel: FCA working on replacement platform
The FCA has announced that it has started work to improve the way it collects data from firms. It plans to move to a new platform for its data collection systems, which will include replacing Gabriel. The FCA asks for Gabriel users to complete a feedback survey to help with this process.
The work is at an early stage. Initial changes to the platform will be technology focused, so initially there will be no change to the way firms provide data to the FCA. However, once it receives firms' feedback, the FCA intends to make significant improvements.
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