White & Case LIBOR Hub: The countdown begins on the London Interbank Offered Rate

The end of 2021 will mark a milestone in global financial markets when regulators phase out the "LIBOR benchmark" that underpins much of the global financial system.

The London Interbank Offered Rate, more commonly known as LIBOR, is one of the most significant global benchmarks for calculating interest. Yet in 2017, the Financial Conduct Authority (FCA) called for LIBOR to be phased out by 2021 and replaced by alternative, risk-free rates. The proposed alternatives to LIBOR across different currencies include the Sterling Overnight Interbank Average (SONIA), Secured Overnight Financing Rate (SOFR), Tokyo Overnight Average rate (TONA), Euro Short-Term Rate (€STR) and Swiss Average Rate Overnight (SARON). Only the Euro Interbank Offered Rate (EURIBOR), the more commonly used euro benchmark, is expected to continue.

With LIBOR being widely used in Banking, Capital Markets, Derivatives, Asset Finance, Project Development and Finance contracts—and in many other contracts—its discontinuation is considered one of the biggest challenges to ever affect the global financial markets. Market participants, including lenders, borrowers and corporates across the developed and emerging markets, need to be aware of this change, including the regulatory complexities considered by our Financial Institutions Advisory group; and the potential for Commercial Litigation and Antitrust/Competition related issues. With trillions of dollars worth of contracts needing amending, our experienced teams of lawyers can guide you through the complexities of this transition process to reach a successful conclusion.