The Financial Conduct Authority (FCA) announced its decision on Thursday to permanently cease the publication of src and 6-month synthetic sterling LIBOR settings on 3src March 2023.
“We have no intention to use our powers to compel IBA to continue to publish the src- and 6-month synthetic sterling LIBOR settings,” the FCA stated.
The decision came after the financial market regulators released a consultation paper last June seeking industry-wide feedback on its intention to bring the permanent cessation of the synthetic settings.
“Market participants need to ensure they are prepared for the permanent cessation of src- and 6-month synthetic sterling LIBOR on 3src March 2023,” the regulator added. However, the deadline for permanently ceasing synthetic yen LIBOR has been previously set for the end of 2022.
End of a Controversial BenchmarkThe reputation of LIBOR, which measures the cost of unsecured borrowing between banks, was tainted by the manipulation of its rates done by several banks. Many traders were charged and penalized for their role in this mass forex market rigging.
The British regulator, which oversees the global benchmark, scraped the usage of the controversial LIBOR rates in 202src. Though the publication of most of the LIBOR rates for foreign currencies ceased on 3src December 202src, only some US dollar settings will continue till 30 June 2023.
The FCA came up with synthetic LIBOR last November for two currencies, sterling and yen, as a temporary measure. These synthetic LIBOR settings are calculated using a forward-looking term version of the relevant risk-free rate: SONIA for sterling and TONA for yen.
“We previously required ICE Benchmark Administration (IBA), the administrator of LIBOR, to continue publication of the src-, 3- and 6-month sterling and yen LIBOR settings for an additional year after end-202src, using a synthetic methodology,” the FCA stated.
“This was to help mitigate the risk of widespread disruption to legacy LIBOR contracts which had not transitioned by end-202src when the sterling and yen LIBOR panels ended.”
The Financial Conduct Authority (FCA) announced its decision on Thursday to permanently cease the publication of src and 6-month synthetic sterling LIBOR settings on 3src March 2023.
“We have no intention to use our powers to compel IBA to continue to publish the src- and 6-month synthetic sterling LIBOR settings,” the FCA stated.
The decision came after the financial market regulators released a consultation paper last June seeking industry-wide feedback on its intention to bring the permanent cessation of the synthetic settings.
“Market participants need to ensure they are prepared for the permanent cessation of src- and 6-month synthetic sterling LIBOR on 3src March 2023,” the regulator added. However, the deadline for permanently ceasing synthetic yen LIBOR has been previously set for the end of 2022.
End of a Controversial BenchmarkThe reputation of LIBOR, which measures the cost of unsecured borrowing between banks, was tainted by the manipulation of its rates done by several banks. Many traders were charged and penalized for their role in this mass forex market rigging.
The British regulator, which oversees the global benchmark, scraped the usage of the controversial LIBOR rates in 202src. Though the publication of most of the LIBOR rates for foreign currencies ceased on 3src December 202src, only some US dollar settings will continue till 30 June 2023.
The FCA came up with synthetic LIBOR last November for two currencies, sterling and yen, as a temporary measure. These synthetic LIBOR settings are calculated using a forward-looking term version of the relevant risk-free rate: SONIA for sterling and TONA for yen.
“We previously required ICE Benchmark Administration (IBA), the administrator of LIBOR, to continue publication of the src-, 3- and 6-month sterling and yen LIBOR settings for an additional year after end-202src, using a synthetic methodology,” the FCA stated.
“This was to help mitigate the risk of widespread disruption to legacy LIBOR contracts which had not transitioned by end-202src when the sterling and yen LIBOR panels ended.”
