LIBOR and reference rate reform

In a speech last year on ‘The Future of Libor’, FCA Chief Executive Andrew Bailey announced that a replacement for LIBOR was needed with a definitive timeline for transition. LIBOR measures the market for unsecured wholesale term lending to banks. With activity in the wholesale funding market on the decline, LIBOR is increasingly based on expert judgment. While the use of discretion is permissible, transaction data more accurately reflects the underlying market the benchmark intends to measure.

To that end, central banks, regulators and market participants are developing transaction-based alternatives. The FCA announced in November 2017 that it had secured the agreement of the 20 panel banks to continue contributing input data to LIBOR through 2021, pending transition to alternative benchmarks.

In this paper, we address four key questions:

  • Is this the end of LIBOR?
  • What will replace LIBOR?
  • What is the impact of the new EU Benchmark Regulation (BMR) on LIBOR?
  • What should firms be doing now to prepare for LIBOR replacement?

Contact us

Nassim Daneshzadeh

Partner, UK LIBOR proposition Co-lead, Global LIBOR team member, PwC United Kingdom

Tel: +44 (0)7850 515 679

Karyn Daud

UK LIBOR proposition Co-lead, Partner, PwC United Kingdom

Tel: +44 (0)7795 617 469

Darren Ketteringham

Global LIBOR team, Partner, PwC United Kingdom

Fiona Lehane

UK Asset Management LIBOR lead, PwC United Kingdom

Tel: +44 (0)7802 660565

Shazia Azim

Partner, Head of Strategy and Chief Operating Officer, Financial Services, UK, PwC United Kingdom

Tel: +44 (0)7803 455549

Ed Simmons

Senior Manager, PwC United Kingdom

Tel: +44 (0)77 1886 4866

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