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On 27 July 2017, Andrew Bailey, Chief Executive of the UK Financial Conduct Authority, made a speech about the future of LIBOR stating that market participants should not rely on LIBOR being available after 2021. Work is progressing on the transition to alternative near risk-free reference rates in each of the LIBOR currencies. The LMA is working with the market, other trade associations and the regulators on the transition, although there is still as yet no obvious alterantive to LIBOR for the syndicated loan market.

What's New?

IASB update: IBOR reform and the effect on financial reporting

Following its meeting on 8 February 2019, the International Accounting Standards Board (IASB) has published an update on the proposed amendments to IFRS Standards that are intended to address concerns associated with IBOR reform.

ICE Benchmark Administration consults on new US Dollar ICE Bank Yield Index

ICE Benchmark Administration Limited ("IBA") has published a paper on a potential new U.S. Dollar ICE Bank Yield Index.

IBA are seeking feedback on the paper by 31 March 2019. The LMA is considering the paper, however, as the questions posed are largely technical, we would encourage institutions to respond individually.

IBA publishes results of survey on the use of LIBOR

ICE Benchmark Administration (IBA) has published the results of its survey on the use of LIBOR currencies and tenors to identify the most widely used LIBOR settings.

The survey along with other outreach work will inform IBA's work with globally active banks in order to continue the publication of certain LIBOR settings post-2021 to users with outstanding LIBOR-linked contracts which are impossible or impractical to modify.

Extension of European Benchmarks Regulation transitional period to end 2021 and agreement on low carbon benchmarks

The EU Parliament and the EU Council have reached political agreement on the extension of the transitional regime for critical and third-country benchmarks until 31 December 2021. Agreement was also reached on a proposal creating a new category of financial benchmarks aimed at giving greater information on an investment portfolio's carbon footprint.

Working group on euro risk-free rates publishes summaries of market feedback on transition from EONIA to ESTER and ESTER-based term structure methodologies

The working group on euro risk-free rates has published summaries of responses received to its report on the transition from the euro overnight index average ('EONIA') to the euro short-term rate ('ESTER') (the 'report'), as well as on the second public consultation on determining an ESTER-based term structure methodology as a fallback in EURIBOR-linked contracts (the 'consultation').

SIX releases selected compounded rates based on SARON for illustrative purposes

SIX, the Benchmark Administrator of the Swiss Average Overnight Rate (SARON), has released selected compounded rates based on SARON for illustrative purposes.

Working Group on Euro Risk-free Rates publishes the "Guiding principles for fallback provisions in new contracts for euro-denominated cash products"

The Working Group on Euro Risk-free Rates has published its "Guiding principles for fallback provisions in new contracts for euro-denominated cash products".

The extent to which market participants adopt and use any of the guiding principles is left to their own discretion.


LMA News H1 2019 - The transition from LIBOR to risk-free rates: taking stock and looking forward

This article provides an update on the LMA's work on the transition away from LIBOR and a summary of the most recent developments in respect of each LIBOR currency.


Life beyond IBORS: finding sustainable benchmarks for the loan market

This is a recording of the IBOR panel session from our annual conference in London on 25 September. Speakers were: chair: Clare Dawson, Chief Executive - LMA; and panellists: Mark Campbell, Special Counsel - Clifford Chance; Brian Fraser, Senior Manager, Loan Operations - Lloyds Banking Group; Ellen Hefferan, Executive Vice President of Operations & Accounting - LSTA; Jaap Kes, Head of Market Risks & Execution - ING Group Treasury; and Edwin Schooling Latter, Head of Markets Policy Department - FCA.

Working Group on Sterling Risk-Free Reference Rates publishes paper on loan transactions referencing Sterling LIBOR

The Working Group on Sterling Risk-Free Reference Rates has published a paper addressed to loan market participants who continue to reference Sterling LIBOR in new and legacy transactions. The paper sets out: (i) the potential considerations associated with legacy or new loan agreements referencing LIBOR; (ii) steps which can be taken to mitigate these considerations for new transactions; and (iii) measures which can be taken to mitigate these considerations for legacy transactions.

While the note principally discusses sterling LIBOR, the considerations in the paper are likely to have relevance for syndicated loans in any currencies for which LIBOR is quoted.