Interest rate benchmark reform: transition to a world without LIBOR

The FCA has published a speech by its Chief Executive, Andrew Bailey, on transitioning from LIBOR to alternative interest rate benchmarks. Highlights in the speech include: the absence of ways to remedy the current underlying weakness in LIBOR lead to the conclusion that the best option is to actively transition to alternative benchmarks; the most effective way to avoid LIBOR-related risk is not to write LIBOR-referencing business; the work being done by risk-free rates working groups in the UK and in other jurisdictions is important as it seeks to make available conventions and standards that can help ensure that financing and risk management are not interrupted when LIBOR disappears. Authorities will support and facilitate this work but ultimately it is the responsibility of each individual firm to address the risks it faces; firms will need to demonstrate to FCA supervisors and their PRA counterparts that they have plans in place to mitigate the risks, and to reduceā€¦

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