On 3 April the UK Monetary Conduct Authority (FCA), which supervises LIBOR’s administrator IBA, announced that it could require IBA to proceed the publication of 1-,3- and 6-month USD LIBOR settings for a brief interval after 30 June 2023, utilizing an unrepresentative ‘artificial methodology’ (‘artificial USD LIBOR’). It’s the said intent that the publication of those LIBOR settings stop on 30 September 2024.
While which means that ‘LIBOR’ will proceed to be printed on the screens after 30 June, artificial LIBOR can solely be utilized in legacy contracts, the place relevant and it can’t be utilized in new contracts. Moreover, regulators have made it clear that artificial LIBOR is just not supposed to be used in contracts that may should be amended to allow its use, and can’t be utilized in cleared derivatives.
The FCA has highlighted that market contributors mustn’t depend on the provision of artificial LIBOR charges rather than energetic transition of legacy contracts. Artificial LIBOR charges present solely a short-term, momentary bridge to various sturdy reference charges.