On 4 May 2023, the Working Group on Euro Risk-Free Rates published "Guidance for Corporate Lending Products for Implementing the Recommendations on EURIBOR Fallback Trigger Events and €STR-based EURIBOR Fallback Rates". 

The Guidance notes that the Working Group's May 2021 recommendations for EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates are not generally being adopted in corporate lending products.  The Guidance reiterates the importance of the adoption of EURIBOR fallback rates and trigger events in new and refinanced euro denominated corporate lending products in order to avoid operational and market disruption risks.  Whilst EURIBOR is not scheduled to be discontinued, this does not negate the need for market participants to include robust fallback language in their contracts.  Robust fallbacks are a requirement of the EU Benchmarks Regulation (BMR) and the Working Group has previously stressed the importance of including robust fallbacks in all financial contracts, not just those within the scope of the BMR.

On 27 April 2023, the Financial Stability Board (FSB) released a statement encouraging market participants to continue to act in order to ensure an orderly transition from US dollar LIBOR and a sustainable and stable financial system moving forward.

With the cessation date of US dollar LIBOR being less than three months away, the FSB emphasised that it is critical that market participants act quickly to ensure the transition of any remaining US dollar LIBOR legacy contracts. This should avoid a 'pile-up' of outstanding contracts towards end-June 2023 that could introduce operational risks and wider market disruption.  

The FSB also reiterated the ongoing importance of market participants choosing robust reference rates for use in their contracts. This is essential to avoid the vulnerabilities experienced with LIBOR and to ensure that the financial system is anchored in these robust risk-free or nearly risk-free reference rates that reflect credible and liquid underlying markets.

On 21 April 2023, the US Alternative Reference Rates Committee (the ARRC) published a summary and update of its Term SOFR scope of use recommendations. 

The ARRC's existing recommendations recognise the ability to use Term SOFR derivatives to hedge Term SOFR business loans or legacy LIBOR products that have transitioned to Term SOFR. The ARRC's update further recognises end users' ability to enter into Term SOFR-SOFR basis swaps (but not other Term SOFR derivatives) in a wider set of circumstances, even when they do not hold Term SOFR cash assets that they are seeking to hedge. This offers an additional channel through which dealers will be able to lay off some Term SOFR risk to other market participants, while ensuring that the use of Term SOFR remains limited overall.

The Financial Stability Oversight Council has endorsed the ARRC's recommendations and its emphasis that Term SOFR use should remain limited.

On 12 April 2023, the Bank of England, the UK Financial Conduct Authority (the FCA) and the Sterling RFR Working Group (the Sterling RFR WG) released a joint statement on US dollar LIBOR panel cessation on 30 June 2023, which is less than 90 days away.

The transition away from US dollar LIBOR remains of critical importance globally, including in the UK where many firms are active in US dollar interest rate markets.

The Bank of England, the FCA and the Sterling RFR WG encourage market participants to continue focusing their efforts on active transition to ensure a smooth transition to robust alternative rates such as SOFR, and on the wind-down of any remaining GBP LIBOR exposures.