Global Interest Rate Reform
Reform of LIBOR and other global benchmark rates used in loans and other financial instruments
The transition away from the London Interbank Offered Rate (LIBOR) and other IBORs is unlike any previous regulatory reform – underpinning loans, debt and derivatives contracts estimated at $350 trillion globally, its scale is potentially larger, it will involve a great number of granular moving parts and is technically challenging.
Whilst alternative risk-free rates are still being agreed, now is the time for banks, asset managers and corporates to start focussing on the replacement timeline, planning and understanding how to make an orderly transition.
IBOR transition will be a project of great scale and complexity – and Linklaters can support you through this journey as your strategic legal adviser, as well as legal adviser for the various specific product areas. We can bring our unrivalled market-leading knowledge of IBOR-related issues, our depth of experience, as well as our track record of running strategic matters driven by regulatory change.
Click here to talk to our team of experts, and do explore our insights on this topic.
(Financial Times) - Bank of England puts squeeze on Libor lending to encourage shift. Read the full article by the Financial Times (£)
(Reuters) - Banks must provide concrete evidence to show that they are ending the use of the Libor interest rate benchmark as a price reference in financial contracts, a senior Financial Conduct Authority official said on Thursday. Read the full article by Reuters
(Financial Times) - UK market regulators on Thursday gave little comfort to senior bank executives who might have been hoping that they can soon stop worrying about Libor. Read the full article by the Financial Times (£)
(Bloomberg) - The borrowing costs known as the London interbank offered rates are embedded throughout the DNA of finance. Read the full article by Bloomberg
Global interest rate reform
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The future of LIBOR
Deepak Sitlani, derivatives partner, reflects on our recent global interest rate reform half day seminar and the latest market developments.
Speaking after our Future of Global Interest Rate Reform seminar, ISDA’s Rick Sandilands highlights in this short video two consultations ISDA is currently conducting on benchmark fallbacks and encourages market participants to engage with these consultations ahead of the 12 July 2019 closing date.
In this video, Kirsty Thomson and Toby Grimstone, banking partners, discuss recent developments in relation to global interest rate reform.
Produced in collaboration with The Investment Association, this short, three minute video outlines the key implications of the transition away from LIBOR for UK investment managers.
Since the announcement on 27 July 2017 by Andrew Bailey, Chief Executive of the Financial Conduct Authority, of the intention to transition away from LIBOR to alternative reference rates by the end of 2021, the market has been focussing on how best to address this major change.
In this short, three minute video we outline the background to, and key implications of, the transition away from LIBOR.
Watch Benedict James who spoke to Bloomberg TV, on 20 December 2019, about the health of the financial system. On LIBOR he cautioned against underestimating the challenges of transition, the scale of change and what it means for legacy contracts.
22nd January 2020
Welcome to the first video in our series of four in which we highlight key developments in the banking market during 2019 and consider what lies ahead for the market in 2020.
23rd December 2019
On 20 December 2019, Benedict James spoke to Bloomberg TV about the health of the financial system.
14th November 2019
In this edition, we continue our series on global interest rate reform. The transition away from LIBOR is gaining traction as the focus increasingly shifts towards the practical implementation of new risk-free rates, with signifcant steps being taken across the fnancial markets.
26th September 2019
On 23 September 2019, the Loan Market Association published two new draft facilities agreements under which interest is calculated by reference to backward-looking compounded risk-free rates. The drafts comprise a compounded SONIA based sterling term and revolving facilities agreement and a compounded SOFR based dollar term and revolving facilities agreement.
12th June 2019
Associated British Ports (ABP), the biggest port operator in the UK, has today received consent from bondholders to switch the benchmark underpinning its £65m floating rate notes due 2022 from LIBOR to SONIA.
24th June 2019
We are pleased to invite you to watch our mid-year review of the banking market, in which we highlight key developments during the first half of 2019.
14th June 2019
In this bulletin, we review the progress of interest rate benchmark reform in Hong Kong and Singapore and discuss the recent key global developments in this complex and fast-moving space.
6th June 2019
On 5 June, the Bank of England, the FCA and the Working Group on Sterling Risk Free Reference Rates (Sterling RFR WG) jointly held a conference on the transition from LIBOR to alternative risk-free rates and both the FCA and PRA published feedback on the Dear CEO letter on LIBOR transition.
28th May 2019
In this edition, we continue our series examining global interest rate reform. Momentum is building in the steps being taken to transition away from LIBOR, with a number of key developments over the last six months.
23rd May 2019
ISDA recently launched two market consultations - the first was on fallbacks for USD LIBOR, CDOR, HIBOR and certain aspects of fallbacks for derivatives referencing SOR and the second addressed “pre-cessation triggers”
16th January 2019
In this video, we will be discussing major developments which affected the banking market, including Brexit, global interest rate reform and lease accounting.
7th January 2019
Nearly $2trillion in loans may need to have their documentation revised following the switch off of the LIBOR (and other IBOR) benchmarks in 2021.
4th December 2018
From MiFID II to operational resilience, LIBOR reform to individual accountability, read our report to refresh yourself about what else has been keeping regulators and market participants busy and take a glimpse of what we expect to come in 2019.
23rd November 2018
18th October 2018
The European Money Markets Institute (EMMI), which is the administrator for the Euro Interbank Offered Rate (EURIBOR), has published its second consultation paper on a hybrid methodology for EURIBOR.
This is important because it sets out further details regarding the new EURIBOR methodology and indicates that EMMI is confident that EURIBOR will comply with the requirements of the EU Benchmark Regulation, such that “EMMI expects to become an authorised benchmark administrator” before January 2020.
10th October 2018
As global regulators prepare for the LIBOR benchmark to be ditched by the end of 2021, analysis published by Linklaters today shows that there are more than $512billion worth of legacy bonds which will need to switch to an alternative reference rate.
19th September 2018
Set out below in an FAQ format is a brief overview of the key aspects of the Benchmarks Supplement.
6th February 2018
EMMI has announced that EONIA, in its current form, is unlikely meet the requirements of the European Benchmark Regulation.
