We set out our policy approach to exercising our powers over critical benchmarks, and our decisions to use these powers to help manage an orderly wind-down of LIBOR.
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April 2024 update
On 1 January 2022, 3 sterling and 3 Japanese yen LIBOR settings became permanently unrepresentative Article 23A benchmarks under the Benchmarks Regulation.
On 1 January 2022, 3 sterling and 3 Japanese yen LIBOR settings became permanently unrepresentative Article 23A benchmarks under the Benchmarks Regulation.
On 31 December 2022, the 3 synthetic Japanese yen LIBOR settings ceased permanently.
On 31 March 2023, the synthetic 1- and 6-month sterling LIBOR settings ceased permanently.
On 30 June 2023, the overnight and 12-month US dollar LIBOR settings ceased permanently.
On 1 July 2023, the 1-, 3- and 6-month US dollar LIBOR settings became permanently unrepresentative Article 23A benchmarks under the Benchmarks Regulation.
On 28 March 2024, the synthetic 3-month sterling LIBOR setting ceased permanently.
We intend that the synthetic 1-, 3- and 6-month US dollar LIBOR settings will cease permanently after final publication on 30 September 2024.
Benchmarks are used in a wide range of markets to help set prices, measure performance, or work out amounts payable under financial contracts. They are integral to the functioning of many financial markets.
The amendments to the Benchmarks Regulation in the Financial Services Act 2021 (FS Act) gave us new powers. The FS Act requires us to publish Statements of Policy before exercising certain powers and we must have regard to them when exercising these powers. We said in June 2020 that we would engage with the market when developing these Statements of Policy.
Statements of policy
In November 2020, we consulted on our proposed policy for using 2 of our powers (Article 23A and Article 23D). Following the consultation, we published feedback statements (on Article 23A and Article 23D) and set out our final policy on:
- Designating an unrepresentative benchmark using new powers under Article 23A.
- Requiring changes to a critical benchmark, including its methodology, using new powers under Article 23D.
In May 2021, we consulted on our proposed policy for using 2 powers over the use of critical benchmarks. Following consultation, we published a feedback statement and 2 Statements of Policy on:
- Permitting legacy use of an Article 23A benchmark under Article 23C.
- Restricting new use of a ceasing critical benchmark under Article 21A.
We may issue a revised Statement of Policy in future if there are any changes to our policy in relation to the powers set out above.
Exercising our powers
In June 2021, we published a further consultation on our proposed decision under Article 23D, to require a change in methodology for 3 sterling and 3 Japanese yen LIBOR settings, with a Feedback Statement (FS21/11) published in November 2021.
Following this consultation, we published a draft Notice confirming our decision to use the Article 23D power after end-2021 in relation to these 3 sterling and 3 Japanese yen LIBOR settings. On 1 January 2022, we issued a final Notice under Article 23D in substantially the same form as the draft and the requirements became effective immediately.
In September 2021, we announced 3 sterling and 3 Japanese yen LIBOR settings would become permanently unrepresentative Article 23A benchmarks, and we would compel their continued publication (on the basis of a changed 'synthetic' methodology) from end-2021.
In November 2021, we announced what legacy use of the 3 sterling and 3 Japanese yen settings would be permitted. We also announced a prohibition on new use of US dollar LIBOR with limited exemptions.
In November 2022, we announced that we intended to require continued publication of the 3-month synthetic sterling LIBOR setting until end-March 2024, after which this setting would cease permanently. This setting ceased permanently on 28 March 2024.
On 3 April 2023, we announced our intention to require LIBOR’s administrator to continue publication of the 1-, 3- and 6-month US dollar LIBOR settings using a changed, synthetic, methodology, until end-September 2024 but not thereafter.
On 31 May 2023, we published a Feedback Statement on responses we received to our Consultation on synthetic US dollar LIBOR (CP22/21).
On 1 July 2023, we issued final Notices under Article 23C and Article 23D in substantially the same form as the draft and their requirements became effective immediately.
On 29 February 2024, we published a report, under Article 23E, setting out our review of whether the use of our power under Article 23D with respect to 3-month synthetic sterling LIBOR has advanced our consumer protection and integrity objectives. The report concluded that the way in which we have exercised our power has advanced both our statutory objectives.
Next steps
Market participants who still have contracts referencing the remaining US dollar LIBOR settings should ensure they are prepared for publication to cease at the respective date for each setting.
Who these documents apply to
We expect this work to be of interest to:
- administrators of critical benchmarks
- contributors to critical benchmarks
- all users of critical benchmarks, both regulated and unregulated
- providers of inputs to synthetic LIBOR settings
Overview
We explain the above and give more detail about our specific powers under the Benchmarks Regulation in our overview document.