The Financial Conduct Authority (FCA) is officially ending the controversial LIBOR benchmark for most of the currencies, a decision that came after an industry consultation in December led by the ICE Benchmark Administration.
The FCA, which oversees the global benchmark, announced on Friday that the publication of LIBOR will cease after December 31, 2021, for the pound sterling, euro, Swiss franc, Japanese yen and for the one-week and two-month US dollar settings.
The rest of the US dollar settings will cease on 30 June 2023. According to the regulator, these timelines will ensure a smooth transition of the cessation of the benchmark.
“Today’s announcements provide certainty on when the LIBOR panels will end,” FCA CEO, Nikhil Rathi said in a statement. “Publication of most of the LIBOR benchmarks will cease at the same time as the panels end. Market participants must now complete their transition plans.”
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The Scandalous FX Benchmark
The reputation of LIBOR, which measures the cost of unsecured borrowing between banks, was tainted by the manipulation of its rates done by several banks. Many traders were charged and penalized for their role in this mass forex market rigging.
Though global authorities were pushing banks, asset managers and other market participants will stop using the FX benchmark, the recent regulatory decision finally cleared the conundrum over the benchmark of a nearly dead market.
“Today’s announcements mark the final chapter in the process that began in 2017, to remove reliance on unsustainable LIBOR rates and build a more robust foundation for the financial system. With limited time remaining, my message to firms is clear – act now and complete your transition by the end of 2021,” said Andrew Bailey, Governor of Bank of England.