Endgame for LIBOR as regulators publish final deadline 19 January 2021: Time has finally been called on LIBOR, dubbed the “world’s most important number”, as UK regulators say they will monitor activity to ensure the interest rate benchmark is no longer used by the end of 2021.
Businesses should have everything in place to transfer financial contracts to other rates, such as SONIA, the BoE overnight interest rate, said Edwin Schooling Latter, director of markets and wholesale policy at the Financial Conduct Authority (FCA).
LIBOR, the London Interbank Offered Rate, is the most commonly used interest rate benchmark to price or value an enormous range of financial products, including corporate and personal loans, mortgages, bonds and derivatives, underlying over $370tn of transactions around the world.
Risk.net
Vanishing liquidity, the Ronin collapse, XVAs – the pandemic wreaked havoc in risk transfer markets
The Covid-19 pandemic brought the financial system to the brink in 2020. Lockdowns turned cities into ghost towns overnight and economic activity ground to a halt. From hastily assembled home offices, market participants faced one crisis after another: equity volatility surged; the US Treasury market seized-up; and oil futures turned negative.
At times, it felt like a year-long crisis was being squeezed into six weeks. CME Group pulled the plug on one of the world’s largest proprietary trading firms. Dealers incurred heavy losses in their structured products books. Some hedge funds were unable to see out the turmoil.