Following Andrew Bailey’s speech withdrawing the FCA’s support for LIBOR by the end of 2021, financial market participants have been examining the best approach to address this major reform.
The Bank of England’s Risk Free Rate Working Group has chosen SONIA as the future sterling market RFR benchmark rate and the Working Group’s current mandate is to ensure a market wide transition to SONIA as the primary sterling interest rate benchmark in bond, loan and derivatives markets by the end of 2021.
The IA is leading the engagement with investment managers to identify the impacts of this significant change on their business and facilitate an effective transition to SONIA with the least amount of disruption.
The Bank of England hosted event on the LIBOR to SONIA Transition on Wednesday 5 June.
The Bank of England, Financial Conduct Authority and the Working Group on Sterling Risk Free Reference Rates jointly held a conference on work underway to transition from LIBOR to alternative risk-free interest rates .
The aim of the conference was to bring together senior policymakers, market participants and other stakeholders who rely on LIBOR to discuss progress that has been made by the Sterling market in adopting alternative interest rates, to assess the remaining challenges in adopting SONIA, setting out the agenda for the Working Groups on Sterling Risk Free Reference Rates, and to share thematic feedback from the Dear CEO exercise.
On the keynote panel were:
Key Messages from the Panel:
With the FCA indicating that it regards the current approach to calculating LIBOR as unsustainable, it expects firms to transition to alternative risk free reference rates before the end of 2021.
Pack prepared by the Working Group on Sterling Risk-Free Rates
Speech by Andrew Bailey reiterating the urgency for market participants to start transitioning