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FCA Announces Discontinuation of LIBOR

10 October 2017

Finance Alert

As you may know, on July 27, 2017 the UK's Financial Conduct Authority (FCA) chief executive Andrew Bailey announced that market participants should not rely on the London Interbank Offered Rate (LIBOR) being available after 2021. 

The recent Loan Market Association Conference in London referred to this as being "the death knell for LIBOR". LIBOR is a global benchmark that is used across product classes and its long term sustainability is thus a topic under consideration in the U.S. and elsewhere around the world. This article briefly summarizes key questions around this topic.

The FCA is concerned that "it is not only potentially unsustainable, but also undesirable, for market participants to rely indefinitely on reference rates that do not have active underlying markets to support them" and is keen that work begins now in earnest on planning for a smooth transition away from LIBOR to alternative reference rates that are firmly rooted in data obtained from transactions.

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