Benchmarks Regulation: our powers, policy and decision-making

We set out our policy approach to exercising our powers over critical benchmarks, and our decisions to use these powers to help manage an orderly wind-down of LIBOR.

3 July 2023 update

On 1 January 2022, 3 sterling and 3 Japanese yen LIBOR settings became permanently unrepresentative Article 23A benchmarks under the Benchmarks Regulation.

On 31 December 2022, the 3 synthetic Japanese yen LIBOR settings ceased permanently.

On 31 March 2023, the synthetic 1- and 6-month sterling LIBOR settings ceased permanently.

On 30 June 2023, the overnight and 12-month US dollar LIBOR settings ceased permanently. 

On 1 July 2023, the 1-, 3- and 6-month US dollar LIBOR settings became permanently unrepresentative Article 23A benchmarks under the Benchmarks Regulation. 

We intend that the 3-month sterling LIBOR setting will cease permanently after final publication on 28 March 2024.

We intend that the 1-, 3- and 6-month US dollar LIBOR settings will cease permanently after final publication on 30 September 2024.

 

Benchmarks are used in a wide range of markets to help set prices, measure performance, or work out amounts payable under financial contracts. They are integral to the functioning of many financial markets.

The amendments to the Benchmarks Regulation in the Financial Services Act 2021 (FS Act) gave us new powers. The FS Act requires us to publish Statements of Policy before exercising certain powers and we must have regard to them when exercising these powers. We said in June 2020 that we would engage with the market when developing these Statements of Policy.

Statements of policy

In November 2020, we consulted on our proposed policy for using 2 of our powers (Article 23A and Article 23D). Following the consultation, we published feedback statements (on Article 23A and Article 23D) and set out our final policy on: 

  • Designating an unrepresentative benchmark using new powers under Article 23A.
  • Requiring changes to a critical benchmark, including its methodology, using new powers under Article 23D.

In May 2021, we consulted on our proposed policy for using 2 powers over the use of critical benchmarks. Following consultation, we published a feedback statement and 2 Statements of Policy on:

  • Permitting legacy use of an Article 23A benchmark under Article 23C.
  • Restricting new use of a ceasing critical benchmark under Article 21A.

We may issue a revised Statement of Policy in future if there are any changes to our policy in relation to the powers set out above.

Exercising our powers

In June 2021, we published a further consultation on our proposed decision under Article 23D, to require a change in methodology for 3 sterling and 3 Japanese yen LIBOR settings, with a Feedback Statement (FS21/11) published in November 2021.

Following this consultation, we published a draft Notice confirming our decision to use the Article 23D power after end-2021 in relation to these 3 sterling and 3 Japanese yen LIBOR settings. On 1 January 2022, we issued a final Notice under Article 23D in substantially the same form as the draft and the requirements became effective immediately.

In September 2021, we announced 3 sterling and 3 Japanese yen LIBOR settings would become permanently unrepresentative Article 23A benchmarks, and we would compel their continued publication (on the basis of a changed 'synthetic' methodology) from end-2021.

In November 2021, we announced what legacy use of the 3 sterling and 3 Japanese yen settings would be permitted. We also announced a prohibition on new use of US dollar LIBOR with limited exemptions. 

In November 2022, we announced that we intend to require continued publication of the 3-month synthetic sterling LIBOR setting until end-March 2024, after which this setting will cease permanently.

On 3 April 2023, we announced our intention to require LIBOR’s administrator to continue publication of the 1-, 3- and 6-month US dollar LIBOR settings using a changed, synthetic, methodology, until end-September 2024 but not thereafter.

On 31 May 2023, we published a Feedback Statement on responses we received to our Consultation on synthetic US dollar LIBOR (CP22/21).

On 1 July 2023, we issued final Notices under Article 23C and Article 23D in substantially the same form as the draft and their requirements became effective immediately.

Next steps

Market participants who still have contracts referencing LIBOR should ensure they are prepared for publication to cease at the respective date for each setting.

Who these documents apply to

We expect this work to be of interest to: 

  • administrators of critical benchmarks 
  • contributors to critical benchmarks 
  • all users of critical benchmarks, both regulated and unregulated
  • providers of inputs to synthetic LIBOR settings

Overview

We explain the above and give more detail about our specific powers under the Benchmarks Regulation in our overview document.

Page updates

: Information changed Next steps update: CP22/21 closed
: Information added Update made to next steps
: Information added decision on cessation of 1- and 6-month synthetic sterling LIBOR
: Publication added CP22/11 published and next steps updated
: Information added next steps section
: Publication added on 1 January 2022, we issued the Notices under Articles 23C and 23D
: Information added updated as designation decisions took effect on 1 January 2022
: Information added following FS21/12 publication
: Information added following publication of FS21/11, Article 23C draft Notice and Article 21A Notice
: Information added regarding statements of policy, notices, draft notice, feedback statement to CP21/15 and new CP21/29