Although coronavirus 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.

In February, the regulator urged asset management firms to put in more measures to prepare for the cessation of the LIBOR benchmark. Namely, the FCA stated that firms should consider switching from LIBOR swaps to SONIA swaps now for new positions, where possible.

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.”