Tag archives: Libor

How are market participants dealing with the retirement of Libor?

Earlier this year I wrote about the Financial Conduct Authority’s (FCA) announcement in July of its plan to phase-out the London Interbank Offered Rate (Libor), the interest rate benchmark used to set payments on more than $350 trillion in financial contracts such interest-rate derivatives, corporate bonds, mortgage loans and more. The FCA’s intention is to retire Libor by the end of 2021, or perhaps more accurately, the FCA will cease to regulate Libor after 2021.

Several reasons, including a sharp decline in observable transaction reporting and the resultant susceptibility to manipulation have been cited as the … Continue Reading

Libor retirement and implications for contracts tied to it

The London Interbank Offered Rate (Libor), the interest rate benchmark used to calculate interest rates on short-term loans by many large banks, will be phased out after 2021 according to its regulator. The London based Financial Conduct Authority (FCA) recently announced that due to growing concerns regarding the long term sustainability of the benchmark, which prior to the financial crisis of 2008 was little-known to those outside of the finance world, a move in another direction was necessary. Libor use in recent years has declined due in part to the dwindling volume of unsecured lending among … Continue Reading