GB - Home stretch of the roadmap for the LIBOR transition

03/05/2021

On 11 January 2021, the Bank of England and the Financial Conduct Authority published the updated of the Working Group on Sterling Risk-Free Reference Rates' priorities and roadmap for the final year of transition to help businesses to finish planning the steps they will need to take in the coming months. The top priority of the Working Group is for markets and their users to be fully prepared for the end of sterling LIBOR by the end of 2021.

In addition, the Working Group has recommended that firms no longer initiate new linear derivatives linked to sterling LIBOR after the end of March 2021, other than for risk management of existing positions or where they mature before the end of 2021.The Working Group has recommended that, from the end of March 2021, sterling LIBOR should be no longer used in any new lending or other cash products that mature after the end of 2021. All businesses with existing loans in sterling should already have heard from their lenders about the transition and those seeking a new or refinanced loan today should be offered a non-LIBOR alternative

The Working Group, the Bank of England, and the FCA have made clear that, in future, they anticipate that the large majority of sterling markets will be based on SONIA compounded in arrears, to provide the most robust foundation for the overall market structure.

Head of Knowledge Management Strategy and Market Infrastructure - SGSS
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