This is a critical year for LIBOR transition. As the Bank's
To help achieve this, the RFRWG has today published its priorities and an updated roadmap for the year ahead to highlight important events and clarify actions market participants should take to reduce LIBOR exposure and transition to alternative rates, including:
* Ceasing issuance of cash products linked to sterling LIBOR by end-Q3 2020;
* Throughout 2020, taking steps that demonstrate that compounded SONIA is easily accessible and usable;
* Take steps to enable a further shift of volumes from LIBOR to SONIA in derivative markets;
* Establishing a framework for the transition of legacy LIBOR products, in order to significantly reduce the stock of LIBOR referencing contracts by Q1 2021; and
* Considering how best to address issues 'tough legacy' contracts.
The Bank and
* First, a joint letter that has been sent to major banks and insurers, supervised in the
* Second, a statement from the Bank and the
The RFRWG has also published a series of documents today, including:
* A document setting out the RFRWG's views on which types of business and client should use overnight SONIA, relative to alternatives including forward-looking term rates. This concludes that use of SONIA compounded in arrears is appropriate and operationally achievable for 90% of new loans by value, which is consistent with the RFRWG's existing expectation that the use of
* forward-looking term rates will be more limited than the current use of LIBOR. The Bank and
* A set of helpful 'lessons learned' from recent conversions of legacy LIBOR contracts.
* A factsheet that makes clear the 'whys' and 'whats' of LIBOR transition and sets out why all market participants need to act now.
Today's publications, along with an update in December (details in notes to editors), are a comprehensive suite of materials that support of the RFRWG's priorities and milestones. The time to act is now: with the tools published today and the support of the official sector domestically and internationally, market participants have what they need to leave LIBOR behind.