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FCA to allow synthetic LIBOR use in 2022 for ‘pool’ of sterling and yen legacy contracts

Compliance Monitor

FCA to allow synthetic LIBOR use in 2022 for ‘pool’ of sterling and yen legacy contracts

The FCA is proposing to allow use of ‘synthetic’ LIBOR contracts in Japanese yen and sterling for legacy contracts referencing one-, three- and six-month contracts for a year after traditional LIBOR ends on 31 December. The proposal is designed “to avoid disruption” regarding “a pool of outstanding legacy contracts [in these markets, including £472 billion in sterling] that cannot practicably be amended to transition away”. Use of this “legacy use power” would apply in all legacy contracts except (directly and indirectly) cleared derivatives.

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