Hong Kong Monetary Authority (“HKMA”) is the front-line regulator for licensed banks and deposit-taking companies (“AIs” or “authorised institutions”) in Hong Kong. LIBOR is used extensively in the Hong Kong banking sector. According to survey results released by HKMA in July 2020, LIBOR-linked products represented 30% and 11% respectively of the banking system’s total assets and total liabilities denominated in foreign currencies as of March 2020. In addition, there were about HK$35 trillion worth of derivative contracts referencing LIBOR.

The reform of the benchmark interest rate has significant implications for AIs in Hong Kong. HKMA has issued a number of Circulars to AIs regarding benchmark rate reforms since March 2019, requiring AIs to get ready for the transition. Similar to the regulators in other jurisdictions, HKMA mainly focuses on bank conduct and treat-customer-fairly principles, and readiness of systems and operations ahead of the transition.


Continue Reading IBOR Transition – Hong Kong Regulatory Guidance

On November 30, 2020, ICE Benchmark Administration Limited (“IBA”) announced its intention, in early December 2020, to consult on the proposed cessation of the publication of:

  • the one-week and two-month USD LIBOR settings immediately following the LIBOR publication on December 31, 2021; and
  • the overnight and one-, three-, six- and 12-month USD LIBOR settings immediately following the LIBOR publication on June 30, 2023.

IBA expects to close the consultation for feedback by the end of January 2021. IBA also noted that any publication of the overnight and one-, three-, six- and 12-month USD LIBOR settings based on panel bank submissions beyond December 31, 2021, will need to comply with applicable regulations, including as to representativeness.


Continue Reading ICE Benchmark Administration to Consult Regarding Cessation of 1-Week and 2-Month USD LIBOR by December 31, 2021, and of Other Tenors by June 30, 2023

The Bank of Thailand currently administers and publishes two reference rates:

  1. the Thai Baht Interest Rate Fixing (“THBFIX”), which uses USD LIBOR as a component, and is more widely used as a reference rate for (a) derivatives, notes and loans, and (b) market-to-market valuations; and
  2. the Bangkok Interbank Offered Rate (“BIBOR”), which is a forward

The Steering Committee for the Singapore Dollar Swap Offer Rate (“SOR”) transition to the Singapore Overnight Rate Average (“SORA”) has actively facilitated the transition from SOR to SORA. Singapore has been leading the charge in Asia on LIBOR transition matters, with many industry leaders making early shifts towards SORA as the new interest rate benchmark to replace US Dollar LIBOR-linked SOR, which traditionally has been used to price bonds and loans to large institutions.

Continue Reading Transition from Singapore Dollar Swap Offer Rate to Singapore Overnight Rate Average – An Update

On November 18, 2020, ICE Benchmark Administration (“IBA”), the authorized administrator of LIBOR regulated by the UK Financial Conduct Authority (“FCA”), announced that it will consult on its intention to cease publication of all tenors of euro, sterling, Swiss franc and yen LIBOR after December 31, 2021, subject to confirmation following IBA’s consultation and any rights of the FCA to compel continued publication by IBA. IBA is still in discussions with the FCA, official sector bodies, and panel banks regarding the future of US Dollar LIBOR.

Continue Reading “The End is Nigh”: UK FCA Issues Consultations Regarding Expected New Benchmark Powers in Response to ICE Benchmark Announcement; ISDA Issues Related Statement

The Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency (“OCC”), and the Federal Deposit Insurance Corporation (collectively, the “Agencies”) released an Interagency Statement on Reference Rates for Loans on November 6, 2020, in which they reiterated that they do not endorse SOFR—the Secured Overnight Financing Rate—or any other specific replacement rate for the London Interbank Offered Rate (“LIBOR”), for use in loan transactions.

Continue Reading “To SOFR or Not to SOFR?”: Prudential Banking Regulators Encourage Fallback Provisions to an “Appropriate” LIBOR Replacement Rate

In a detailed 25-page memorandum to U.S. prudential banking regulators,[1] the Alternative Reference Rates Committee detailed concerns regarding the transition from LIBOR to SOFR and possible effects on current U.S. bank regulatory capital and liquidity requirements. In the memorandum, the ARRC makes several preliminary recommendations regarding changes to such requirements, in order to facilitate such transition and avoid unintended disincentives or other adverse regulatory consequences.

Continue Reading ARRC Requests Changes to Bank Regulatory Capital and Liquidity Requirements to Facilitate Transition from LIBOR to SOFR

On October 28, 2020, New York State Senator Kevin Thomas introduced Senate Bill S9070, which would add a new Article 12 to New York’s Uniform Commercial Code that substantially adopts the language from the proposed legislative solution produced by the Alternative Reference Rates Committee (ARRC) in March 2020. For some market participants,[1] this announcement may trigger hearing the Halleluiah chorus from Handel’s Messiah, while others may still be asking why it took so long, and still others may be asking why bother given its potential limitations.[2]

Continue Reading LIBOR Transition Assistance Legislation Introduced in New York State Senate

The UK Government released its promised[1] draft legislation, Financial Services Bill 200, on October 20, 2020,[2] to assist the ‘tough legacy’ issue for certain LIBOR-referencing contracts by providing the UK’s Financial Conduct Authority with new and enhanced powers to oversee the orderly wind-down of critical benchmarks, such as LIBOR. The legislation includes the authority for the FCA to direct a change in the methodology of a critical benchmark and extend its publication for a limited time period.

Continue Reading Promised UK ‘Tough Legacy’ Legislation Released; HM Treasury Issues Supporting Policy Statement

As everyone knows by now, with the demise of LIBOR and other IBORs, insurance companies, banks, and a wide range of other financial institutions are faced with identifying, reviewing, and remediating all active contracts that reference an IBOR rate. Many that have begun this process are learning that the process is much less daunting if those instruments are centralized in a digital contract management tool.

Continue Reading IBOR: A New Frontier for Digital Contract Management