Welcome to the latest issue of Mayer Brown's IBOR Transition Digest—a periodic compendium of global regulatory and market developments and insights on the complex issues confronting financial market participants as they plan to transition from LIBOR and its variants to replacement benchmark interest rates. As attention to IBOR transition accelerates and becomes more focused, it is critical to have access to comprehensive and timely resources about the market.
For additional resources and an introduction to our global
cross-practice IBOR Transition Task Force, please visit Mayer
Brown's IBOR Transition portal.
NEW IBOR TRANSITION TOOL
IBOR Transition Readiness
Survey
Mayer Brown IBOR portal, Introduced 17 November 2020
Our latest IBOR transition resource, an IBOR transition
readiness survey jointly developed and presented with Morae Global,
helps organizations address the complex and imminent issue of IBOR
transition, with follow up guidance and checklists.
THOUGHT LEADERSHIP
Update on the Proposal for a Governmental
IBOR Transition in the European Union
Eye on IBOR Transition Blog, 14 January 2021
Following the discussion and status set out in our September 2020 blog post, Proposal for a Governmental IBOR Transition in the European Union, the proposed amendment to the EU Benchmark Regulation ("BMR") has been developed further and a consolidated version published reflecting the text agreed by the Council of the European Union and the European Parliament.
NEWS AND DEVELOPMENTS
United Kingdom – General
The final countdown: Completing sterling
LIBOR transition by end-2021
Working Group on Sterling Risk-Free Reference Rates, 11
January 2021
A statement from the Sterling Working Group highlighting
key LIBOR transition priorities for 2021, and announcing that the
group is working on developing "a market standard for
appropriately limited use of term SONIA reference rates"
consistent with the Working Group's objectives and existing Use Case guidance.
Updated Top Level Priorities –
2021
Working Group on Sterling Risk-Free Reference Rates, 11
January 2021
Updated recommendations for the final year of GBP LIBOR
transition, including that GBP LIBOR no longer be used after March
2021.
Bowing out gracefully: LIBOR's
retirement draws near
Working Group on Sterling Risk-Free Reference Rates, 8
December 2020
In this speech at a Risk.net LIBOR Telethon, Bank of
England Executive Director for Markets, Andrew Hauser, highlights
three key LIBOR transition actions for market participants (stop
using LIBOR, adopt ISDA's fallbacks protocol, and reduce legacy
contract volume) and notes, "[LIBOR] is now well and truly in
need of retirement. The unsecured term interbank lending markets it
seeks to measure barely trade, even in calm conditions. And when
things get rocky, they don't trade at all...."
Europe – General
Third roundtable on euro risk-free
rates
European Central Bank, 14 December 2020
Links to recordings of all Roundtable presentations.
Program topics include regulatory and supervisory perspectives on
interest rate benchmark reform, and a Q&A session on the
outstanding EURIBOR consultations.
Asia/Pacific Rim – Syndicated and Bilateral Loans
TONA (Fixing in Arrears) Conventions to Use
in Loans
Bank of Japan, 25 December 2020
Providing loan conventions and examples based on a
consultation with members of the Sub-Group on Loans reflecting
primarily the "Lookback Without Observation Shift"
approach but also illustrating other approaches, and summarizing
responses relating to rate publication and calculators.
Asia/Pacific Rim – General
Roadmap to Prepare for the Discontinuation
of LIBOR
Bank of Japan, 30 November 2020
Key milestones are set forth for systems and
infrastructure, loan and bond products, and the development of term
reference rates, as well as contract negotiations and the cessation
of the use of JPY LIBOR.
MAYER BROWN EVENTS
Replays of all of our IBOR Transition Webinar Series presentations are available via iTunes podcasts, Google play or Spotify, as well as on the IBOR Transition Webinar Series page of our dedicated IBOR Transition portal.
REVERSEinquiries Workshop: ISDA 2020 IBOR
Fallbacks Protocol
Webinar, 21 January 2021
Mark your calendars: January 25, 2021 is the
implementation date of the ISDA 2020 IBOR Fallbacks Protocol. In an
effort to be fully prepared, join us for an updated discussion on
the features of the protocol and its underlying document template,
as well as issues such as adherence to the protocol and final
timing milestones. We will analyze the protocol and answer the
following questions:
- What are the implications for loans and their hedges, structured products, repos, stock lending, non-standard transactions and other cash instruments?
- Who are the adherents to the protocol, and who is not adhering?
- Which agreements are in scope and out of scope under the protocol?
- What are the key issues for "tough legacy" transactions.
Additionally, we will discuss LIBOR cessation, its timeline, and understanding what is to come post-implementation.
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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.