The Financial Conduct Authority (FCA) has confirmed that 20 banks have agreed to continue making submission to the Libor benchmark until 2021.
The UK watchdog said it expects the focus to now turn towards developing alternative rates and working towards “a transition that can be executed smoothly”.
Following the scandal around Libor submissions, Andrew Bailey, chief executive of the FCA said that despite improvements to Libor since April 2013, the “absence of active underlying markets” meant the future sustainability of the rate cannot be guaranteed.
The FCA has been working with the panel banks to finalise an agreement for the banks to remain on the panels they currently submit to until the end of 2021.
“We at the FCA have regulated LIBOR since April 2013. Since then, significant improvements have been made to LIBOR through the work of its administrator, ICE Benchmark Administration (IBA), and the work of the 20 panel banks that submit contributions to the benchmark,” Bailey said in July this year.
“Together they have introduced a step change in the quality of governance around submissions to this important reference rate.”
There were two amendments to individual panel compositions according to the FCA, as Societe Generale will cease submissions to the US Dollar panel and Credit Agricole Corporate and Investment Bank will cease submissions to the Japanese Yen panel.
In a statement, the regulator said that it does not expect to see any further changed to the panels which submit to the rate which underpins a range of derivatives and financial products.