November 30, 2020

Volume X, Number 335

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FSB Publishes Global Transition Roadmap on LIBOR

On October 16, the Financial Stability Board (FSB) published a global transition roadmap, including a timetable of actions to be taken by financial and non-financial institutions exposed to the London Inter-bank Offered Rate (LIBOR) benchmarks, to ensure a seamless transaction away from LIBOR by the end of 2021 (the Roadmap).

The key steps suggested by the FSB to mitigate the risks before the end of 2021 in the Roadmap include:

  • by now, firms should have identified and assessed all existing LIBOR exposures, assessed the necessary changes to its systems and processes and devised a plan for communicating with end-users of LIBOR products maturing beyond the end of 2021 to ensure they are aware and supported through the transition;

  • by the effective date of the ISDA Fallbacks Protocol (Protocol), firms are encouraged to adopt to the Protocol or consider making alternative arrangements to mitigate risk;

  • by the end of 2020, lenders should be capable of offering non-LIBOR linked loan products to their customers by either offering a choice of reference rates underlying the loan or including language in the loan for a conversion by the end of 2021 for any new or refinanced LIBOR referencing loans;

  • by mid-2021, firms should strive to establish formalized plans to modify legacy LIBOR-linked contracts to alternative reference rates and implement required system and process changes to enable the transition to robust alternative rates; and

  • by the end of 2021, firms should be prepared for LIBOR to cease and conduct business in alternative rates or be in a position to switch rates efficiently.

The FSB emphasized the importance of all regulated financial institutions to have transparent LIBOR discussions with its home state and host state regulators throughout the transition period.

The FSB advised firms to monitor developments regarding other interbank offered rates relevant to its business.

The Roadmap is available here.

©2020 Katten Muchin Rosenman LLPNational Law Review, Volume X, Number 297
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About this Author

Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws...

+44 0 20 7776 7625
Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

+44 0 20 7776 7629
Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

44-0-20-7776-7666
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