Consultation outcome

Supporting the wind-down of critical benchmarks

From:: HM Treasury
Published: 15 February 2021
Last updated: 7 May 2021 — See all updates

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Letter from the Economic Secretary to RFR Working Group

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Letter from the Economic Secretary to RFR Working Group

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Detail of outcome

Government Response to the consultation on Supporting the wind-down of critical benchmarks

The consultation received 32 responses and HM Treasury would like to thank all those who engaged.
After carefully considering all responses, the government intends to bring forward further legislation, when the Parliamentary time allows, to address issues identified in the consultation.
The legislation will seek to reduce disruption that might arise from LIBOR transition with regard to the potential risk of contractual uncertainty and disputes in respect of contracts that have been unable to transition from LIBOR to another benchmark (so-called “tough legacy” contracts), where the FCA has exercised the powers given to it in the Financial Services Act.
It remains the view of HM Treasury that, wherever possible, parties should seek to transition contracts away from LIBOR ahead of the end of the 2021 and the Government, the FCA and the Bank of England will continue to work closely to encourage market-led transition from LIBOR and to monitor progress.
The Treasury has also published its reply to the Working Group on Sterling Risk Free Reference Rates on the same issue.

Original consultation

Consultation description

The consultation seeks to understand the extent to which there is uncertainty over the continued application of a critical benchmark to contracts where the FCA has exercised its power to direct a change in how the benchmark is determined under the Benchmarks Regulation, and the risk of associated litigation. Where respondents can evidence the need for further protections, the consultation invites responses on the appropriate scope for any legal protections and whether the administrator of a “designated” critical benchmark should also be afforded specific protections where it is acting in accordance with requirements imposed by the FCA.

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