November 30, 2020 was bookended by a series of announcements that provided details on the prospective timing of LIBOR’s demise and will impact how market participants plan and prepare in the following months for LIBOR’s cessation.
The coordinated statements by both the official and private sector need to be read together. Pending the outcome of IBA’s consultation on the cessation of LIBOR, market participants now have a high degree of clarity on LIBOR’s cessation timeline: virtually all USD LIBOR product issuances will end after December 31, 2021, and USD LIBOR publication will end after June 30, 2023.
We have provided a summary of key announcements and takeaways from last week. For more information on these and other LIBOR transition related developments subscribe to PwC’s LIBOR Transition Market Update here.
ICE Benchmark Administration (IBA) announces plans for USD LIBOR and publishes consultation on cessation of LIBOR
On Monday, IBA announced it would consult on its plans for the discontinuation of USD LIBOR. That consultation, which also covers the remaining LIBOR currencies, was subsequently published on Friday. The key takeaways are:
Comments on IBA’s publication are due by January 25, 2021.
U.S. regulators’ interagency guidance on the use of USD LIBOR
On Monday, the Federal Reserve Board (Fed), Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) issued guidance on the ongoing use of USD LIBOR. Key takeaways include:
The statement represents the US regulators’ sternest warning to cease the issuance of new USD LIBOR products to date, effectively limiting the use of USD LIBOR after 2021 to a narrow set of transactions related to legacy USD LIBOR exposures.
FCA statement on USD LIBOR
The Financial Conduct Authority (FCA), IBA’s primary regulator, issued a statement of support of IBA’s intentions, welcoming the prospects of a clear end date to the USD LIBOR panel. Similar to the US regulators, it too suggested that it would consider limiting the use of USD LIBOR for FCA-supervised firms after 2021.
ISDA webinar featuring FCA, Fed and ARRC representation
On Friday, ISDA published a webinar featuring, among others, Edwin Schooling Latter, Director of Markets and Wholesale Policy at the FCA, David Bowman, Senior Associate Director at the Federal Reserve Board, and Tom Wipf, Vice Chairman of Institutional Securities at Morgan Stanley and Chairman of the ARRC. The webinar summarized the path forward for LIBOR, provided that IBA’s consultation confirms its plans. Key takeaways include:
A transcript of the webinar has been made available as well.
ARRC guide on the endgame for USD LIBOR
The ARRC published a summary of this week’s news and the implications for USD LIBOR going forward. Key takeaways include:
Global Financial Services Leader, PwC US
Partner, PwC US
US Deals, Strategy & Operations Leader for Tax Reporting & Strategy, PwC US
Financial Services, Principal, PwC US
Asset & Wealth Management, Partner, PwC US
Financial Services, Partner, PwC US
Principal, PwC US
Capital Markets Strategy Partner, PwC US