Although LIBORs are currently among the most important reference rates in financial markets, their existence is not guaranteed beyond 2021, as previously announced by the FCA (which regulates LIBORs) and confirmed by numerous regulators across the globe. Market participants are therefore defining solutions to smooth the transition away from LIBORs. In particular, alternative reference rates (ARRs) have been defined and new products are being launched.
As part of this transition, we are pleased to report that on 25 March SIX (administrator for SARON, the CHF ARR) announced the launch of SARON compounding indices for 1-, 3- and 6-month time periods. This key achievement will help align market participants and will simplify internal processes. In these times dominated by the Covid-19 pandemic, it is reassuring to see such a positive development!
Looking beyond our borders, the Federal Reserve Bank of New York (administrator for SOFR, the USD ARR) started publishing similar indices on 2 March this year, and the Bank of England (administrator for the SONIA, the GBP ARR) plans a launch in July this year, both using comparable approaches.
On 25 March the FCA confirmed the 2021 final transition deadline – despite Covid-19 – but may revisit some of the interim milestones.
As a final note, we would like to send you and your loved ones our best wishes in these unprecedented times.
For more about the transition process, explore Deloitte’s recently published insights on the journey ahead for IBOR.