The group finance director of Barclays has stepped away from his role as chair of the industry-led Libor Working Group as the final phase of the transition away from the benchmark begins.
Tushar Morzaria will be replaced by the Association of Corporate Treasurer’s Sarah Boyce in March, who will lead the Libor transition through its final stages.
Ahead of the cessation date on 31 December, the Bank of England, the Financial Conduct Authority (FCA) and the Working Group confirmed in a joint statement that a successful CCP conversion saw in excess of £13 trillion Libor-referencing contracts converted to the risk-free reference rate (RFR), SONIA (Sterling Overnight Index Average), during December, leading to less than 2% of the total sterling Libor legacy stock now remaining across asset classes.
However, the three entities maintain that there is still work to be done and have set out plans to seek industry views on the potential retiring of one-month, three-month and six-month synthetic sterling Libor benchmarks by the end of this year, reiterating that these remain a purely “temporary bridge to risk-free-rates” designed to help legacy sterling Libor contracts in their transition.
The FCA moved to prohibit the use of US dollar Libor on certain new contracts at the start of this year in a bid to speed up the US transition, which the regulator said was of “critical importance” particularly for those UK firms that are active in the US dollar interest rate markets.
One- and two-month US dollar settings ceased on 31 December alongside the Sterling settings, however, the three-month, six-month and 12-month benchmarks are expected to cease in June next year.
In their statement, the Bank of England, the FCA and the Working Group reaffirmed this stance and encouraged the industry’s transition to the US alternative reference rate SOFR, adding that they would be continuing to monitor this progress.
“The fact that most Libor settings ended at end-2021 with minimal disruption is a testament to the co-operation across a wide range of industry sectors and jurisdictions,” said Bank of England governor, Andrew Bailey.
“With only a few settings remaining to facilitate the further wind-down of existing exposures, I would like to thank all involved for their efforts and encourage those with remaining Libor exposures to see this project through to its very end.”