A set of documents outlining priorities and milestones for 2020 relating to the LIBOR transition has today been published by Britain’s financial authorities – with insurers urged to step up their efforts.
The documents detailed that 2020 is a critical year for LIBOR transition and that, while good progress has been made, companies need to accelerate their pushes to ensure they are prepared for LIBOR cessation by the end of 2021.
“2020 will be a pivotal year in the transition journey, with critical focus on enabling the flow of new business away from sterling LIBOR,” said Tushar Morzaria, chair of the Working Group on Sterling Risk-Free Reference Rates (RFRWG).
The publications released by the RFRWG, as well as the Bank of England and the Financial Conduct Authority (FCA), clarify the actions that market participants should take to reduce LIBOR exposure and switch to alternative rates, and state that firms must cease issuance of cash products linked to sterling LIBOR by the end of Q3 2020.
Christopher Woolard, executive director of strategy and competition at the FCA, commented: “In most products, market participants have made impressive progress in moving away from LIBOR. The time has come to draw to a close its remaining use… Firms must act now to help meet these targets and ensure a smooth transition to alternative rates by end-2021.”
Meanwhile, Andrew Hauser, executive director for markets at the Bank of England outlined how today’s publications help provide greater clarity for the market on a number of central issues.
“The groundwork has been laid for a decisive shift away from LIBOR in 2020,” he said.
