FCA Consults On Synthetic LIBOR, Use Of LIBOR Post-2022

In an effort to "ensure an orderly wind-down," the UK Financial Conduct Authority ("FCA") will require the publication of certain "synthetic" LIBOR rates for JPY and GBP.

In a Consultation Paper (CP21/29) and Feedback Statement (FS21/10), the FCA said it would designate the following six versions for continued publication on a synthetic basis beginning January 1, 2022:

• one-month Sterling LIBOR,
• three-month Sterling LIBOR and
• six-month Sterling LIBOR ("Sterling LIBOR Versions"); and
• one-month Yen LIBOR,
• three-month Yen LIBOR and
• six-month Yen LIBOR ("Yen LIBOR Versions").

The FCA explained that its chosen synthetic rates will "provide a reasonable and fair approximation of what panel bank LIBOR might have been in the future," but will not be considered "representative" under the Benchmarks Regulation. The FCA stated that the synthetic methodology will be (i) "forward-looking term versions of the relevant risk-free rate" and (ii) "the respective