About LIBOR transition

The interest rate benchmark LIBOR has permanently ceased.

Background to LIBOR being wound down

In 2017, the FCA and the Financial Policy Committee[1] (FPC) noted that it had become increasingly apparent that the absence of active underlying markets and the scarcity of term unsecured deposit transactions raised serious questions about the future sustainability of the LIBOR benchmarks[2].

The LIBOR panel banks agreed to continue submitting to LIBOR until end-2021 (later extended to end-June 2023 for US dollar LIBOR only), to enable time for the market to move away from LIBOR.

In March 2021, the FCA[3] and ICE Benchmark Administration[4]  (the administrator of LIBOR) announced that sterling, euro, Swiss franc and Japanese yen LIBOR panels, as well as panels for 1-week and 2-month US dollar LIBOR, will cease at end-2021, with the remaining US dollar LIBOR panels ceasing at end-June 2023.

We confirmed our decision to use powers[5] to use powers, which the Government granted us under the Benchmarks Regulation, to require continued publication on a changed methodology (also known as a 'synthetic') basis for the 1-month, 3-month and 6-month sterling LIBOR settings and, until end-2022, the same Japanese yen LIBOR settings. These synthetic LIBOR rates were not intended for use in new contracts, but were available for some holders of 'legacy' LIBOR-referencing contracts.

In September 2022, we confirmed[6] that publication of 1-month and 6-month synthetic sterling LIBOR would be required until end-March 2023, after which these settings would cease permanently.  

In November 2022, we announced[7] that we intended to compel the publication of 3-month synthetic sterling LIBOR until end-March 2024, after which it would cease permanently. We also published a consultation[8]  on our proposals to use our powers to require continued publication of the 1-month, 3-month, and 6-month US dollar LIBOR settings under a synthetic methodology for a temporary period until end-September 2024.

In April 2023, we announced[9] that we intended to compel the publication of the 1-month, 3-month and 6-month US dollar LIBOR settings under a synthetic methodology until end-September 2024 for use in all legacy contracts other than cleared derivatives. In May 2023, we published a detailed Feedback Statement[8] setting out our response to the feedback received to our November consultation.

We have previously asked parties to contracts that were referencing LIBOR to transition to robust, appropriate reference rates, re-negotiating with counterparties where necessary. As we said previously, we did not want to see transition to so-called 'credit sensitive' rates (CSRs) which have the potential to reintroduce many of the financial stability risks associated with LIBOR. We ask that any UK regulated market participants looking to use CSRs in UK-based business consider the risks carefully and raise with their FCA supervisors before doing so. We also expect UK regulated benchmark administrators to continue to notify us in advance if they intend to administer CSRs and make them available for use in the UK.

Transition to alternative risk-free rates

More on transition work with market participants and the RFR Working Group

Alongside the Bank of England, we have worked closely with market participants to support the move away from LIBOR in sterling markets, particularly through the Working Group on Sterling Risk-Free Reference Rates (RFR Working Group)[10].

In April 2017, the RFR Working Group recommended[11] a reformed version of the Sterling Overnight Index Average[12] (SONIA) benchmark[13] as its preferred near Risk-Free Rate (RFR) for sterling markets. This rate is administered by the Bank of England. Following its recommendation, the RFR Working Group led a broad-based transition to SONIA in sterling bond, loan and derivatives markets. The RFR Working Group published a roadmap[13] for completion of the transition away from sterling LIBOR.

SONIA offers a robust alternative to LIBOR. The rate is based on overnight interest rates in wholesale markets, so is close to a risk-free measure of borrowing costs. The rate is robust and anchored to an active and liquid underlying market. It can be compounded over a lending period to produce a term interest rate. There are a number of advantages to borrowers[14] and other market participants from using near RFRs, compounded as appropriate.

International coordination on benchmark reform

Global work and LIBOR alternatives by jurisdiction

The Financial Stability Board’s (FSB) Official Sector Steering Group (OSSG) coordinates international efforts on benchmark reform and the transition from LIBOR to RFRs. The OSSG is co-chaired by Nikhil Rathi, Chief Executive of the FCA, and John Williams, President and Chief Executive Officer of the Federal Reserve Bank of New York.

The FSB published a global transition roadmap for LIBOR[15] with actions for financial and non-financial sector firms to take to ensure a smooth LIBOR transition.

RFRs recommended as alternatives to LIBOR

Jurisdiction	Working Group	Alternative Ref Rate Name	Administrator	Collateralisations	Description
United States of America	Alternative Reference Rates Committee[16]	Secured Overnight Financing Rate (SOFR)[17]	Federal Reserve Bank of New York	Secured	Secured rate that covers multiple overnight repo market segments
United Kingdom	Working Group on Sterling Risk-Free Reference Rates[18]	Sterling Overnight Index Average (SONIA)[14]	Bank of England	Unsecured	Unsecured rate that covers overnight wholesale deposit transactions
Switzerland	The National Working Group on CHF Reference Rates[18]	Swiss Average Rate Overnight (SARON)[19]	SIX Exchange	Secured	Secured rate that reflects interest paid on interbank overnight repo rate
Japan	Study Group on Risk-Free Reference Rates[20]	Tokyo Overnight Average Rate (TONAR)[24]	Bank of Japan	Unsecured	Unsecured rate that captures overnight call rate market
Euro area	Working Group on Euro Risk-Free Rates[21]	Euro short-term rate (€STR)[22]	European Central Bank	Unsecured	Unsecured rate that captures overnight wholesale deposit transactions

01/10/2024 : Information changed following the end of LIBOR.

02/04/2024 : Information added 3-month Synthetic Sterling LIBOR has ceased.

09/01/2023 : Editorial amendment page update as part of the website refresh

25/02/2022 : Editorial amendment

04/01/2022 : Information added majority of LIBOR panels have ended and their settings ceased or are permanently unrepresentative

10/12/2021 : Information added following FS21/12 publication

29/09/2021 : Information added confirmed our decision to use new powers for certain legacy contracts

26/03/2021 : Information added

19/01/2021 : Information added ISDA Protocol section.

First published: 02/09/2019 Last updated: 01/10/2024 See all updates

About LIBOR transition

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Background to LIBOR being wound down

Transition to alternative risk-free rates

International coordination on benchmark reform

RFRs recommended as alternatives to LIBOR

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