Welcome to the latest issue of Mayer Brown's IBOR Transition Digest-a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates. As attention to IBORtransition accelerates and becomes more focused, it is critical to have access to comprehensive and timely resources about the market.
THOUGHT LEADERSHIP
Financial Stability Board Releases Latest Progress
Report on LIBOR Transition, Urging Action to Complete Transition by
Year-End and Calling Out the Loan Markets
Eye on IBOR Transition blog, 7 July 2021
The report finds that adequate tools necessary to complete
transition are and have been available, and that active market
engagement and international coordination and consistency are
crucial.
Eeny, Meeny,
Miny, Muse; Which LIBOR Alternative Shall I
Choose?
Eye on IBOR Transition blog, 30 June 2021
Summarizing what we know so far about the six alternative
benchmarks vying to replace USD LIBOR.
Mayer Brown 7th
OTC Derivatives Seminar: Recordings, Slides and Materials Made
Available in this Post
The Long and Short of It blog, 30 June 2021
A number of sessions include IBOR-related topics. Links to
program materials are included.
NEWS AND DEVELOPMENTS
United States – General
Prepared Remarks of SEC Chair Gary Gensler at
London City Week
Securities and Exchange Commission, 23 June
2021
Reiterating his remarks on 11 June 2021
at the Financial Stability Oversight Council meeting, SEC Chair
Gensler noted, "I have concerns that as LIBOR is replaced, a
number of commercial banks are advocating for replacement indices
that are still reliant on short-term, unsecured, bank-to-bank
lending."
FHFA Supervisory Letter: Alternative Reference
Rate Selection Risk Management
Federal Housing Finance Agency, 1 July
2021
Providing guidance on the criteria that should be
considered in selecting an alternative benchmark rate, and advising
that Federal Home Loan Banks "need to provide advance notice
to their respective Examiner-in-Charge of plans to use an
alternative reference rate not already being used by the
FHLBanks."
ARRC Welcomes FHFA Supervisory Letter on
Transition Away from LIBOR
Alternative Reference Rates Committee, 1 July
2021
ARRC Chairman Tom Wipf stated that the FHFA supervisory
letter is "very much in line with the points that the ARRC has
made."
United Kingdom – General
LMA response to FCA consultation on powers
for use over critical benchmarks
Loan Market Association, 17 June 2021
Responding to the FCA's 11 consultation questions and
stressing "the importance of international consistency, not
creating an unlevel playing field which could pose a threat to
market integrity."
LIBOR – 6
months to go – speech by Edwin
Schooling Latter at UK Finance's Commercial Finance Week
Financial Conduct Authority, 5 July 2021
Criticizing "so-called 'credit sensitive'
rates," and stating, "We all want a good strong finish,
not to fade or stumble in the home straight."
Global - General
Progress Report
to the G20 on LIBOR transition issues: Recent developments,
supervisory issues and next steps
Financial Stability Board, 6 July 2021
Outlining the risks, challenges, and key themes associated
with LIBOR transition, and urging, "Given the limited time
available until end-2021, the FSB strongly urges market
participants to act now to complete the steps set out in
its Global Transition Roadmap." The FSB calls
out the loan markets as "an area of particular
concern."
FSB urges action
to complete the transition away from LIBOR by
end-2021
Financial Stability Board, 6 July 2021
"With timelines for cessation of LIBOR panels now
confirmed, there should be no remaining doubts as to the urgency of
the need to transition away from LIBOR by the end of
2021."
IBOR Transition Digest (July 08 2021)
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
