By Carolyn Cohn
LONDON (Reuters) – Meeting some of the milestones for ending the use of Libor for pricing loans could be difficult for some firms, Britain’s Financial Conduct Authority said on Wednesday.
Libor or London Interbank Offered Rate is an interest rate benchmark used in contracts worth around $400 trillion globally and the FCA has set an end of 2021 date for ending its use, after banks were fined billions of dollars for trying to rig it.
“The central assumption that firms cannot rely on Libor being published after the end of 2021 has not changed and should remain the target date for all firms to meet,” the FCA said.
“There has, however, been an impact on the timing of some aspects of the transition programs of many firms… it is likely to affect some of the interim transition milestones.”
Regulators and an industry working group had agreed that new loans should be priced with Sonia, an overnight interest rate compiled by the Bank of England, from the third quarter.
The aim is to minimize as far as possible loans being priced against Libor beyond the end of 2021. A similar milestone for swaps contracts passed this month.
“Alongside other international authorities, the Bank of England, FCA and Working Group will continue to monitor and assess the impact on transition timelines, and will update the market as soon as possible,” the FCA said.
(Reporting by Huw Jones; editing by Carolyn Cohn)
