FCA: Despite Coronavirus, LIBOR Cessation Still Planned for 2021
- Whilst the pandemic has impacted transition plans, firms still need to be ready for the deadline.

Although Coronavirus Coronavirus The outbreak of Covid-19 or Coronavirus in early 2020 has since redefined the financial services industry. Brokers have been forced to quickly adapt to several changes, both positive and negative.This includes the FX industry, which saw surges in volumes across the retail and institutional space in Q1 2020. This trend can be explained by an outflow of volatility, coupled with countries taking major moves to stabilize their respective economies.In conjunction with uncertainty caused by the virus, most countries also resorted to lockdowns in a bid to stifle the virus’ spread. At the time of writing, nobody knows whether this tactic will succeed in controlling Covid-19, though its early impact on financial markets is being felt already.Equity markets across most exchanges effectively crumbled by nearly a third in early 2020, with the worst being seen in March 2020. Stock markets have since rebounded, though only with the help of broad-based stimulus programs. Nowhere was this more prevalent than in the United States, with the Federal Reserve resorting to measures not used since the Great Financial Crisis. This included trillions in bond-buying purchases in a bid to stabilize the economy.The outbreak of Covid-19 also saw the collapse of the global oil market, which saw futures briefly enter into negative territory. Highly reduced demand out of China and most economies, as well as a price war between Russia and Saudi Arabia have exacerbated this trend.Effects of Covid-19 on BrokersIn the retail space, forex brokers have experienced an early surge in trading volumes in 2020. This can be explained by a large uptick in potential clients, ironically due to stay at home orders and quarantining.It remains to be seen whether this trend will hold longer term as middle-aged potential investors return to work in 2020. In terms of other operations, brokers have had to rethink traditional call centers and other mechanisms for reaching clients due to the disruption of the virus.A push for online call centers and other such support is likely to overtake other methods of dealing with clients with a vaccine as of yet not available. Longer-term, a looming recession can also potentially impact brokers with the pool of investors once again possibly shrinking. As the situation of Covid-19 is unprecedented, brokers have joined other entities in a wait-and-see mode. The outbreak of Covid-19 or Coronavirus in early 2020 has since redefined the financial services industry. Brokers have been forced to quickly adapt to several changes, both positive and negative.This includes the FX industry, which saw surges in volumes across the retail and institutional space in Q1 2020. This trend can be explained by an outflow of volatility, coupled with countries taking major moves to stabilize their respective economies.In conjunction with uncertainty caused by the virus, most countries also resorted to lockdowns in a bid to stifle the virus’ spread. At the time of writing, nobody knows whether this tactic will succeed in controlling Covid-19, though its early impact on financial markets is being felt already.Equity markets across most exchanges effectively crumbled by nearly a third in early 2020, with the worst being seen in March 2020. Stock markets have since rebounded, though only with the help of broad-based stimulus programs. Nowhere was this more prevalent than in the United States, with the Federal Reserve resorting to measures not used since the Great Financial Crisis. This included trillions in bond-buying purchases in a bid to stabilize the economy.The outbreak of Covid-19 also saw the collapse of the global oil market, which saw futures briefly enter into negative territory. Highly reduced demand out of China and most economies, as well as a price war between Russia and Saudi Arabia have exacerbated this trend.Effects of Covid-19 on BrokersIn the retail space, forex brokers have experienced an early surge in trading volumes in 2020. This can be explained by a large uptick in potential clients, ironically due to stay at home orders and quarantining.It remains to be seen whether this trend will hold longer term as middle-aged potential investors return to work in 2020. In terms of other operations, brokers have had to rethink traditional call centers and other mechanisms for reaching clients due to the disruption of the virus.A push for online call centers and other such support is likely to overtake other methods of dealing with clients with a vaccine as of yet not available. Longer-term, a looming recession can also potentially impact brokers with the pool of investors once again possibly shrinking. As the situation of Covid-19 is unprecedented, brokers have joined other entities in a wait-and-see mode. Read this Term has brought with it a lot of market uncertainty, the Financial Conduct Authority (FCA) has reminded market participants that the LIBOR benchmark is still set to cease at the end of 2021.
“The transition from LIBOR remains an essential task that will strengthen the global financial system. Many preparations for transition will be able to continue,” the British regulator said in a statement this Wednesday.
Specifically, the UK watchdog said that although the benchmark deadline is still on track, the regulator does acknowledge that the global pandemic has caused timing issues for many market participants’ transition programs and are therefore still reliant on the LIBOR.
“Alongside other international authorities, the Bank of England, FCA and Working Group will continue to monitor and assess the impact on transition timelines, and will update the market as soon as possible,” the regulator said.
FCA: 2020 is pivotal year for transition
The LIBOR benchmark interest rate is set to terminate at the end of 2021. Previously, the regulator has said that 2020 is a pivotal period for financial firms. However, the COVID-19 crisis has brought a few obstacles for financial firms.
Furthermore, asset management companies should not make new investments in GBP LIBOR based cash products maturing beyond 2021 by end Q3 2020. The FCA has also urged companies to have a transition plan in place.
“It is essential that you reflect on the points raised in this letter and act as appropriate. LIBOR ending is a market event and the transition to alternatives is market-led,” the regulator explained in the letter in February.
“We expect you to take proactive steps now where appropriate and not to wait for instructions from clients. Firms should not expect or base their transition plans on future regulatory relief or guidance or on legislative solutions.”
Although Coronavirus Coronavirus The outbreak of Covid-19 or Coronavirus in early 2020 has since redefined the financial services industry. Brokers have been forced to quickly adapt to several changes, both positive and negative.This includes the FX industry, which saw surges in volumes across the retail and institutional space in Q1 2020. This trend can be explained by an outflow of volatility, coupled with countries taking major moves to stabilize their respective economies.In conjunction with uncertainty caused by the virus, most countries also resorted to lockdowns in a bid to stifle the virus’ spread. At the time of writing, nobody knows whether this tactic will succeed in controlling Covid-19, though its early impact on financial markets is being felt already.Equity markets across most exchanges effectively crumbled by nearly a third in early 2020, with the worst being seen in March 2020. Stock markets have since rebounded, though only with the help of broad-based stimulus programs. Nowhere was this more prevalent than in the United States, with the Federal Reserve resorting to measures not used since the Great Financial Crisis. This included trillions in bond-buying purchases in a bid to stabilize the economy.The outbreak of Covid-19 also saw the collapse of the global oil market, which saw futures briefly enter into negative territory. Highly reduced demand out of China and most economies, as well as a price war between Russia and Saudi Arabia have exacerbated this trend.Effects of Covid-19 on BrokersIn the retail space, forex brokers have experienced an early surge in trading volumes in 2020. This can be explained by a large uptick in potential clients, ironically due to stay at home orders and quarantining.It remains to be seen whether this trend will hold longer term as middle-aged potential investors return to work in 2020. In terms of other operations, brokers have had to rethink traditional call centers and other mechanisms for reaching clients due to the disruption of the virus.A push for online call centers and other such support is likely to overtake other methods of dealing with clients with a vaccine as of yet not available. Longer-term, a looming recession can also potentially impact brokers with the pool of investors once again possibly shrinking. As the situation of Covid-19 is unprecedented, brokers have joined other entities in a wait-and-see mode. The outbreak of Covid-19 or Coronavirus in early 2020 has since redefined the financial services industry. Brokers have been forced to quickly adapt to several changes, both positive and negative.This includes the FX industry, which saw surges in volumes across the retail and institutional space in Q1 2020. This trend can be explained by an outflow of volatility, coupled with countries taking major moves to stabilize their respective economies.In conjunction with uncertainty caused by the virus, most countries also resorted to lockdowns in a bid to stifle the virus’ spread. At the time of writing, nobody knows whether this tactic will succeed in controlling Covid-19, though its early impact on financial markets is being felt already.Equity markets across most exchanges effectively crumbled by nearly a third in early 2020, with the worst being seen in March 2020. Stock markets have since rebounded, though only with the help of broad-based stimulus programs. Nowhere was this more prevalent than in the United States, with the Federal Reserve resorting to measures not used since the Great Financial Crisis. This included trillions in bond-buying purchases in a bid to stabilize the economy.The outbreak of Covid-19 also saw the collapse of the global oil market, which saw futures briefly enter into negative territory. Highly reduced demand out of China and most economies, as well as a price war between Russia and Saudi Arabia have exacerbated this trend.Effects of Covid-19 on BrokersIn the retail space, forex brokers have experienced an early surge in trading volumes in 2020. This can be explained by a large uptick in potential clients, ironically due to stay at home orders and quarantining.It remains to be seen whether this trend will hold longer term as middle-aged potential investors return to work in 2020. In terms of other operations, brokers have had to rethink traditional call centers and other mechanisms for reaching clients due to the disruption of the virus.A push for online call centers and other such support is likely to overtake other methods of dealing with clients with a vaccine as of yet not available. Longer-term, a looming recession can also potentially impact brokers with the pool of investors once again possibly shrinking. As the situation of Covid-19 is unprecedented, brokers have joined other entities in a wait-and-see mode. Read this Term has brought with it a lot of market uncertainty, the Financial Conduct Authority (FCA) has reminded market participants that the LIBOR benchmark is still set to cease at the end of 2021.
“The transition from LIBOR remains an essential task that will strengthen the global financial system. Many preparations for transition will be able to continue,” the British regulator said in a statement this Wednesday.
Specifically, the UK watchdog said that although the benchmark deadline is still on track, the regulator does acknowledge that the global pandemic has caused timing issues for many market participants’ transition programs and are therefore still reliant on the LIBOR.
“Alongside other international authorities, the Bank of England, FCA and Working Group will continue to monitor and assess the impact on transition timelines, and will update the market as soon as possible,” the regulator said.
FCA: 2020 is pivotal year for transition
The LIBOR benchmark interest rate is set to terminate at the end of 2021. Previously, the regulator has said that 2020 is a pivotal period for financial firms. However, the COVID-19 crisis has brought a few obstacles for financial firms.
Furthermore, asset management companies should not make new investments in GBP LIBOR based cash products maturing beyond 2021 by end Q3 2020. The FCA has also urged companies to have a transition plan in place.
“It is essential that you reflect on the points raised in this letter and act as appropriate. LIBOR ending is a market event and the transition to alternatives is market-led,” the regulator explained in the letter in February.
“We expect you to take proactive steps now where appropriate and not to wait for instructions from clients. Firms should not expect or base their transition plans on future regulatory relief or guidance or on legislative solutions.”