LIBOR Alert: IBA and UK FCA Announcements on LIBOR Consultations November 2020

James Haddad
Markets Regulation

ICE Benchmark Administration (IBA), the entity responsible for LIBOR administration, has today announced it will consult on its intention to cease publication of euro, sterling, Swiss franc and yen LIBOR at the end of 2021. Discussions on the future of USD LIBOR will continue between the IBA, the FCA, official sector bodies and panel banks.

The FCA has also released a statement regarding the potential use of new benchmark powers conferred by the Financial Services Bill which was introduced into the UK Parliament on 21 October, 2020. The FCA is planning to consult with market participants on its potential approach to the exercise of the new powers to ensure an orderly wind down of LIBOR.

Following this, ISDA released a statement confirming that neither of these announcements will constitute an index cessation event under the IBOR Fallbacks Supplement or the ISDA 2020 IBOR Fallbacks Protocol. As such, no fallbacks under the supplement or protocol will be triggered and there will be no effect on the calculation of the spread.

Separately, Refinitiv, the benchmark administrator for Canadian interest rates, has announced that the calculation and publication of the 6-month and 12-month tenors of the Canadian Dollar Offered Rate (CDOR) benchmark will cease from Monday May 17, 2021 onwards. The last day of publication of these CDOR tenors will therefore be Friday 14 May, 2021. As a consequence, the announcement is expected to mean that the “Spread Adjustment Fixing Date” for the purposes of the ISDA fallback mechanism will be November 12, 2020.

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