FCA Confirms Availability of Synthetic USD LIBOR Until October 2024

Synthetic 1M, 3M and 6M US dollar LIBOR to be available until 30 September 2024

The FCA has confirmed that one-month, three-month and six-month US dollar LIBOR will be made available on a synthetic basis for fifteen months after the rate's official discontinuation on 30 June 2023.

As proposed in the FCA's November 2022 consultation, in the absence "unforeseen and material events" the FCA intends to require ICE Benchmark Administration to publish synthetic US dollar LIBOR until 30 September 2024. The synthetic rate will be calculated as CME Term SOFR for the relevant tenor plus the applicable ISDA spread. This will be available for use in all legacy contracts except for cleared derivatives.

UK BMR Article 23A benchmark

The one-month, three-month and six-month US dollar LIBOR tenors will be officially designated "Article 23A benchmarks" under the UK Benchmarks Regulation (UK BMR) from 1 July 2023, meaning that from such date they will no longer be representative. Accordingly, after 30 June 2023 all non-transitioned English law US dollar LIBOR contracts and instruments will automatically switch to synthetic US dollar LIBOR (where available) under the UK BMR. Contracting parties will not be able to argue that use of the synthetic rate constitutes breach, material change, or frustration of the contract.

Federal legislation is also in place in the US to facilitate the transition away from US dollar LIBOR. You can read more about the interaction between English law, US law and synthetic USD LIBOR in our briefing.

Synthetic US dollar LIBOR rates will not be representative and will therefore only be available for use in legacy instruments, not new instruments.

Discontinuation dates

Following the discontinuation on 31 March 2023 of one-month and six-month synthetic sterling LIBOR, the confirmed discontinuation dates for the remaining LIBOR and synthetic LIBOR rates are as shown below.

 For more on LIBOR transition, please see our LIBOR Hub. 

Authors: Mike Logie and Kirsty McAllister-Jones