In separate statements (see here and here), the Financial Conduct Authority (the "FCA") and ICE Benchmark Administration (the "IBA") responded to ISDA's December 2019 letter requesting confirmation that the "reasonable period" during which LIBOR would continue to be published following an announcement from the FCA that LIBOR is no longer representative would be minimal (i.e., months rather than years).

FCA Response

The FCA urged market participants to expect non-representative LIBOR to be published for a period no greater than a few months. In its statement, the FCA encouraged ISDA to allow derivatives market participants to include pre-cessation fallback triggers in their derivative contracts. The FCA also reaffirmed its stance that it will not seek to sustain LIBOR beyond the end of 2021 by requiring panel banks to make submissions.

IBA Response

The IBA affirmed its expectation that any cessation of LIBOR would be announced within a reasonable time in advance of the benchmark becoming unrepresentative. The IBA stated that this is necessary in order to avoid publishing a nonrepresentative benchmark. The IBA also noted that the period of time to implement a cessation of a LIBOR setting is dependent upon the facts and circumstances at that time.

The IBA referenced provisions under its Changes and Cessation Procedure for LIBOR, explaining the steps it would take if LIBOR settings became unrepresentative. The IBA stated that it would begin by (i) immediately informing the FCA, in addition to sharing the results of any representativeness testing, and then (ii) share any IBA-verified testing results with other relevant regulatory bodies, central banks and/or the LIBOR Oversight Committee.

Primary Sources

  1. ISDA Press Release: New Letters on Pre-Cessation Issues Welcome
  2. FCA Letter to ISDA
  3. IBA Letter to ISDA

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