LIBOR use in new contracts ‘must end this year’

The Australian Securities and Investments Commission (ASIC) says regulators are reiterating the importance of ensuring a timely transition away from the London Interbank Offered Rate (LIBOR).

In a statement released yesterday, ASIC said this required ceasing the use of LIBOR in new contracts before the end of 2021.

It said that, on 2 June, the Financial Stability Board (FSB) announced that all new use of LIBOR benchmarks should cease as soon as practicable and no later than the timelines set out by home authorities and/or national working groups in the relevant currencies.

In particular, even though some USD LIBORs would continue until mid-2023, the United States Banking Supervisors had said that firms should cease entering into new contracts that used USD LIBOR as a reference rate as soon as practicable and, in any event, by no later than 31 December 2021.

ASIC, the Australian Prudential Regulation Authority and the Reserve Bank of Australia support the guidance and expectations set by the FSB and the US Banking Supervisors.

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