The London Interbank Offered Rate
("LIBOR") will be discontinued, as panel
banks will no longer be required to provide quotations for its
computation after 2021. The Singapore Interbank Offered Rate
("SIBOR") will also be reformed, to
modify its computation methodology in a manner that promotes
reliance on market transactions. Banks will need to consider the
impact on rate fixing and documentation.
LIBOR Reform
Background
The UK Financial Conduct Authority has announced that LIBOR will
be discontinued after 2021. Following allegations of LIBOR
manipulation, reform of LIBOR has been suggested, such as the
confirmation of submissions on LIBOR against transaction data and
the involvement of market participants in the surveillance of
LIBOR. In essence, doubt has been cast on whether LIBOR remains a
true representation of the unsecured funding costs of banks.
