McDermott Comment | FCA And The Bank Of England Encourage Market Participants In A Switch To SOFR In US Dollar Interest Rate Swap Markets From 26 July

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Ranajoy Basu, partner at law firm McDermott Will & Emery, said:

“The recent announcement by the Bank of England will increase the volume of transactions quoted in SOFR and consequently, will also speed up the LIBOR transition process through implementation of a term rate for SOFR. In recent months we have witnessed a lot of activity in relation to the transition process and this will further escalate that process. The result of this is that term SOFR will be available upon implementation of the change in quoting conventions with market participants using SOFR as a replacement reference rate.

All of this echoes the message from banking regulators that banks should no longer enter contracts using LIBOR after this year.

We have been very busy with regard to dealing with documentation and queries from clients with regard to the transition process and we would expect to see further activity following recent announcements.”