On Thursday, the risk-free rate working group at the Bank of England published its priorities for the transition away from Libor to Sterling’s risk-free replacement interest rate, Sonia.
Making a firm, if entirely predictable, statement that “the time to act is now”, the group declared that its requirements now include ceasing the issuance of cash products linked to Sterling Libor by the end of the third quarter of 2020; pushing a further shift of volumes from Libor to Sonia in derivative markets; establishing a framework for the transition of legacy Libor products; and considering how best to address “tough legacy” contracts.
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