UK Ends Synthetic LIBOR on 30th September Which was Created as a Temporary Bridge to Allow Firms to Move Outstanding LIBOR-Linked Contracts to Other Risk-Free Rates, LIBOR was Referenced in Estimated $400 Trillion of Financial Contracts
3rd October 2024 | Hong Kong
The UK (United Kingdom) has ended the synthetic LIBOR on 30th September 2024 which was created as a temporary bridge to allow firms to move outstanding LIBOR-linked contracts to other risk-free rates. LIBOR was referenced in estimated $400 trillion of financial contracts. Joint press release from the Bank of England, the FCA and the Working Group on Sterling Risk-Free Reference Rates (Working Group) on 1st October 2024: “Yesterday, 30 September 2024, the remaining synthetic LIBOR settings were published for the last time and LIBOR came to an end. All 35 LIBOR settings have now permanently ceased. The transition away from LIBOR, once referenced in an estimated $400 trillion of financial contracts, has made financial markets safer, more stable and fit for modern use. UK regulators, their international counterparts and market participants have worked together over the past decade to move to risk-free rates (RFRs), based on robust data. Synthetic LIBOR was a temporary bridge to give firms more time to move outstanding legacy LIBOR-linked contracts towards alternative RFRs, allowing for an orderly cessation. A milestone to celebrate – The transition from LIBOR has been a complex international cross-industry effort spanning well over a decade. The successful transition away from LIBOR would not have been possible without the work and contribution of many people across the globe, including market participants, trade bodies, regulators and other authorities.” Looking ahead – Market participants are encouraged to continue to ensure they use the most robust rates for the relevant currency, such as SONIA for GBP and SOFR for USD. Market participants should ensure their use of term risk-free reference rates, such as term SONIA and term SOFR are limited and remain consistent with the relevant guidance on best practice on the scope of use. With the transition away from LIBOR completed, the Bank, the FCA and Working Group remind market participants that credit sensitive rates (CSRs) should not emerge as successor rates, supported by the FPC’s view that these rates are not robust or suitable for widespread use as a benchmark. In particular, the FCA and FPC have communicated to the market that USD CSRs have the potential to reintroduce many of the financial stability risks associated with LIBOR.”
“ UK Ends Synthetic LIBOR on 30th September Which was Created as a Temporary Bridge to Allow Firms to Move Outstanding LIBOR-Linked Contracts to Other Risk-Free Rates, LIBOR was Referenced in Estimated $400 Trillion of Financial Contracts “
UK Ends Synthetic LIBOR on 30th September Which was Created as a Temporary Bridge to Allow Firms to Move Outstanding LIBOR-Linked Contracts to Other Risk-Free Rates, LIBOR was Referenced in Estimated $400 Trillion of Financial Contracts
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