Intercontinental Exchange, Inc. (NYSE:ICE) announced today that ICE Benchmark Administration Limited (IBA), the authorized and regulated administrator of LIBOR, has provided an update on the discontinuation of sterling LIBOR.
In line with feedback from the June 2022 consultation and its previous statements, the UK Financial Conduct Authority (FCA) used its powers under the UK Benchmark Regulation (UK BMR) to require the IBA to publish the 3-month sterling LIBOR setting using a non-representative “composite” methodology by 28 March 2024.
The FCA has stated that it has no intention of requiring publication beyond that date and that this arrangement will cease after publication on that date.
Currently, the IBA also requires the FCA to continue to publish the “composite” 1-, 3- and 6-month US dollar LIBOR settings. The FCA has indicated that it intends to require the IBA to publish these arrangements by 30 September 2024, but not beyond that date, when publication is expected to cease.
All other LIBOR settings have ceased to be published. “Synthetic” LIBOR settings required to be published under a “synthetic” methodology are not representative of the underlying market or economic reality that the setting was intended to measure prior to this requirement.
The use of “synthetic” LIBOR arrangements by UK regulated entities is prohibited under the UK BMR, provided that the FCA permits use by UK regulated entities in legacy contracts other than cleared derivatives.
Users of LIBOR arrangements should obtain appropriate legal and regulatory advice in all relevant jurisdictions to ensure that they understand and are prepared for the impact of the cessation or non-representability of any LIBOR arrangements on them and their counterparties under any applicable law or regulation, financial contracts, financial instruments and other regulations.