In July 2017, the Financial Conduct Authority (“FCA”) announced that it would not guarantee the survival of London Interbank Offered Rate (“LIBOR”) after the end of 2021. The announcement came in the context of wide-ranging reform of financial benchmarks and a planned transition from interbank offered rates (“IBORs”) to risk-free reference rates (“RFRs”). Markets, regulators and central banks in a number of jurisdictions have grappled with the uncertainty arising from the process of transition. In these circumstances, the European Commission has published a proposal to amend the BMR (the “Legislative Proposal”) so as to ensure that regulators have the tools to guide the transition avoiding contract frustration and financial instability.
The FMLC would like to draw attention to issues of uncertainty in relation to the Legislative Proposal. This includes, in particular, complexities which arise owing to possible discrepancies between the provisions of the Legislative Proposal and action taken in other jurisdictions to mitigate uncertainties from LIBOR transition.
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