In the United Kingdom and the United States, regulators are emphasizing their focus on the London Interbank Offered Rate (LIBOR) transition, and financial firms readiness to move to Risk-Free Rates (RFRs). They are increasingly publishing milestones and concrete steps that should be taken to mitigate any risks associated with the LIBOR transition. The Financial Stability Board (FSB), which coordinates financial rules for the Group of 20 Economies (G20), has stated that “Firms need to end the use of Libor in new contracts as soon as possible.”1 It will report to the G20 in July 2020 on the challenges to the LIBOR transition.2

United Kingdom:

  • In late February, the Bank of England urged market participants to accelerate efforts in 2020 to permit the adoption of RFRs across the full range of Sterling business. Bank of England Executive Director for Markets told an International Swaps and Derivatives Association Derivatives conference that from October 2020 the Bank will increase “haircuts” on LIBOR linked collateral, and any such collateral issued after October 2020 is ineligible for use at the Bank of England.3
  • The Bank of England plans to publish a “compounded” Sterling Overnight Index Average (SONIA) from July 2020 to help the transition from LIBOR in loan products.4
  • The Financial Conduct Authority (FCA) issued a “Dear CEO” letter to Asset Management firms to set out expectations that all institutions take reasonable steps so that the transition from LIBOR does not lead to markets being disrupted or harm to consumers. Asset Management firms should not make new investments in Sterling LIBOR by the end of Q3 2020 and should prepare a transition plan across all relevant businesses.5

United States:

  • In early March Tom Wipf, Alternative Reference Rate Committee (ARRC) Chair, welcomed the Federal Reserve Bank of New York’s inaugural publication of Secured Overnight Financing Rate (SOFR) Averages and a SOFR Index.6
  • The ARRC released in late January a Vendor Survey to help software and technology vendors assess their readiness to transition to SOFR. The survey should also serve as a platform for vendors to raise operational issues to the ARRC.7


Taiwan’s Bankers Association stated in February that “Under the supervision of the Central Bank that banks would need to discuss which alternative rates they would use to replace LIBOR.”8 They are likely to recommend that Taiwanese banks use SOFR to replace LIBOR in most contracts, and given the significant assets denominated in US dollars. The Central Bank of the Republic of China (Taiwan) called on banks to carefully evaluate the effects of the transition on business procedures, accounting and tax operations, risk-based assets, capital calculation models and information systems.9


While global regulators are continuing to emphasize that firms cannot rely on LIBOR being published beyond December 2021, and that this should remain the target date for all financial institutions to meet, there has been discussion on the impact of the global health shock on transition plans over the coming months. The FCA, Bank of England, and members of the Working Group on Sterling Risk-Free Reference Rates have appreciated that there may be an impact on some of the timelines for institutions transition programs. Global regulators are expected to continue monitoring this impact and updating the market on a regular basis.10


  1. “Global regulator ratchets up pressure on banks and markets to ditch Libor,” Reuters, December 18, 2019. Access at: 
  2. Ibid. 
  3. “Bank of England ‘turbo-charges’ moves to ditch Libor,” Reuters, February 26, 2020. Access at: 
  4. Ibid 
  5. “Asset management firms: prepare now for the end of Libor,” Financial Conduct Authority, February 27, 2020. Access at: 
  6. “ARRC Chair Tom Wipf Welcomes the Publication of SOFR Averages and a SOFR Index,” Alternative Reference Rates Committee, March 2, 20202. Access at: 
  7. “ARRC Releases Vendor Survey and Buy-Side Checklist on Transition to SOFR,” Alternative Reference Rates Committee, January 31, 2020. Access at: 
  8. “Taiwan Banks Likely to Replace LIBOR with SOFR: FSC,” Regulation Asia, February 26, 2020. Access at: 
  9. Ibid. 
  10. “FCA: Covid-19 to hit Libor transition timetable,” Finextra, March 25, 2020. Access at:

Newsletter Author: Venetia WooMairi Bryan 

Newsletter Contact Person: Venetia Woo  


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