Aussie Regulators Urge Firms to Accelerate Switch from LIBOR

Multiple Australian regulators have requested market participants to make a transition away from their legacy contracts with the London Interbank Offered Rate (LIBOR). In addition, they want the financial institutions to cease the use of the controversial benchmark in new contracts by the end of 2021.

The guidelines came from three Aussie watchdogs: the Australian Securities and Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term Commission (ASIC), the Australian Prudential Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term Authority (APRA) and the Reserve Bank of Australia (RBA).

After years of controversy for manipulation of the LIBOR rates by several banking cartels, the United Kingdom’s financial market regulator decided to phase out the benchmark. Most of the LIBOR currency benchmark will cease to exist by the end of this year, while a few US dollar settings will cease on 30 June 2023.

“Firms should, as soon as practicable, stop the sale and issuance of LIBOR-referenced contracts that expire after their relevant cessation dates and most importantly, stop offering new LIBOR products after the end of 2021,” said ASIC Commissioner, Cathie Armour.

Earlier, the United Kingdom and the United States regulators issued similar requests to financial institutions to accelerate the switch from LIBOR.

Banking Cartels

Meanwhile, there were a dozen bankers who had been convicted on Libor rate-rigging charges in a series of prosecutions brought by global regulators, which ultimately prompted an overhaul of the rate-setting rules. Prosecutors alleged that bank traders dishonestly manipulated the rate to benefit their own trading positions, nudging them up or down while ignoring rules that they should be set independently.

Most recently, the inter-dealer broker, ICAP was fined 6.45 million euros for its role in several yen interest rate derivatives cartels.

“Firms should not waste any time in moving away from LIBOR,” added Christopher Kent, Assistant Governor at RBA (Financial Markets).

“The end date for LIBOR is clear and pending. Continued use of LIBOR after the end of 2021 poses significant risks to firms. There should be no new use of LIBOR, including USD LIBOR, after the end of 2021.”