FCA Confirms Rules Regarding Use Of Synthetic Sterling And Yen LIBOR

The UK Financial Conduct Authority ("FCA") confirmed new rules regarding legacy use of the synthetic sterling and Japanese yen LIBOR for contracts that have not fully transitioned away from the benchmark rate by December 31, 2021.

In the Notice of Prohibition and Draft Notice, the FCA confirmed the following rules:

• synthetic LIBOR will be permitted for all legacy contracts except for cleared derivatives;
• the FCA is requiring the publication of one-, three- and six-month tenors of sterling and Japanese yen LIBOR on a synthetic basis until the end of 2022, as proposed in the September consultation (see  previous coverage) to allow more time to complete the transition and avoid market disruption;