Despite numerous warnings from the FCA that "firms
shouldn't be relying on...a “synthetic” US dollar
LIBOR as we have given for sterling and yen" (see
speech by the FCA's Edwin Schooling Latter on 8 December
2021), last week the regulator
confirmed that it would allow market participants to do just
that.
In this blog post, we explore how this recent development may
impact the litigation risks of LIBOR transition, in particular from
a conflicts of laws perspective.
Background
The UK's legislative framework to deal with LIBOR
cessation provides the FCA with new regulatory powers to publish
so-called “synthetic” LIBOR in currencies and tenors to
be determined by the FCA (following consultation with the market).
The legislation provides that any references to LIBOR, in a
contract or arrangement, should be “deemed” (i.e. read)
to be the synthetic form since inception of the contract,
regardless of how references to LIBOR are expressed. For a detailed
analysis of
