ICMA responds to FCA CP 21/19 on the proposed decision under Article 23D BMR for 6 sterling and yen LIBOR settings


25 August 2021 ICMA responded to UK FCA CP 21/19 on the FCA’s proposed decision under Article 23D BMR to require the administrator of LIBOR, ICE Benchmark Administration (IBA), to change the way six identified LIBOR settings (namely the 1-month, 3-month and 6-month sterling and Japanese yen LIBOR settings) are determined after 2021 to secure an orderly wind-down. Following the announcement by the FCA on 5 March 2021 that the six identified sterling and yen LIBOR settings will no longer be representative and representativeness will not be restored immediately after 31 December 2021, ICMA’s response supported the exercise by the FCA of its powers under Article 23D(2) in order to introduce “synthetic LIBOR” for the six identified LIBOR settings. ICMA noted that, in order for synthetic LIBOR to meet its aim of supporting an orderly wind-down of LIBOR, all parties will need to take the same view as the FCA that “synthetic LIBOR remains LIBOR”. The legislation that HM Treasury is expected to introduce in order to support contract continuity further will therefore be very important. It will also be very important for synthetic LIBOR to be published in the same manner (using the same screens and at the same time) as LIBOR.
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