FCA to Require the Temporary Publication of Synthetic LIBOR Settings

Nick Allen Commentary by Nick Allen

The UK Financial Conduct Authority ("FCA") will require LIBOR’s administrators, the ICE Benchmark Administration ("IBA"), to publish one-, three- and six-month U.S. dollar LIBOR settings beyond June 30, 2023.

In a Draft Notice of Requirements, the FCA stated the "synthetic" USD LIBOR will use an "unrepresentative ‘synthetic’ methodology" based on the relevant CME Term SOFR Reference Rate plus the applicable ISDA fixed spread adjustment and is scheduled to be published until, tentatively, September 30, 2024. The FCA determined that the temporary publication was necessary in order to ensure that the cessation of each of the U.S. dollar LIBOR settings "takes place in an orderly fashion."

The FCA stated that firms must "actively transition" contracts that reference U.S. dollar LIBOR. The FCA added that the synthetic USD LIBOR settings are intended only for use in legacy contracts, and are not designed to be a convenience for firms that could have transitioned such legacy contracts but failed to do so.


While legislation in the U.S. made “zombie” LIBOR moot for in-scope transactions, this is a timely reminder that USD LIBOR’s cessation date is less than 100 days away. Time is of the essence to complete any outstanding transition tasks.

One open question is whether this announcement will have any impact on the USD ICE Swap Rate, which is outside the scope of U.S. LIBOR-related legislation and is set to cease on June 30, 2023.

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