Extension for Certain Benchmarks may Ease LIBOR Transition

The Intercontinental Exchange, Inc. announced that ICE Benchmark Administration, which administers LIBOR rates, will speak with market participants about continuing to use certain benchmarks linked to LIBOR until June 30, 2023. The ICE Benchmark Administration is still proposing to end publication of  the one-week and two-month U.S. dollar LIBOR on Dec. 31, 2021. The extension would apply to the publication of overnight and one-, three-, six- and 12-month U.S. dollar LIBOR.  Global banking regulators had originally targeted the end of 2021 to cease usage of LIBOR benchmarks. The extension effectively allows more time for certain legacy contracts to transition from LIBOR, according to the Wall Street Journal. Meanwhile, U.S. banking regulators published a joint statement on December 1 encouraging banks to stop using LIBOR in new contracts “as soon as practicable” starting at the end of next year, and said that if banks continue to underwrite contracts with the benchmark as usual after that time it “would create safety and soundness risks,” according to a report in Barron’s. In a statement, SEC Chairman Jay Clayton said of the LIBOR developments: “Today’s announcements establish a pragmatic, market-oriented path for managing the transition away from LIBOR. We encourage registrants to proactively transition to market-based reference rates and stand ready to assist market participants.”