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On 27 February, the FCA published a `Dear CEO' letter (PDF 514 KB) to all regulated asset management firms setting out its expectations of asset managers' preparations for the end of LIBOR at end-2021. This is the first time that asset managers have been addressed specifically on this subject and follows `Dear CEO' letters to banks and insurers in September 2018 and January 2020.

The letter does not appear to have been sent separately to fund management companies and does not explicitly recognise the additional implications for the decision-making process in relation to collective investment funds, although there is a reference to product governance considerations.

Given the emphasis on LIBOR transition plans in this letter, firms should ensure they have robust and comprehensive transition plans that meet all the expectations outlined in the letter. The FCA may ask to see individual firms' plans in the near future, especially if it considers that the sector is not transitioning fast enough away from LIBOR to prevent market disruption or harm to consumers.

In a separate letter (PDF 100 KB) to ISDA, the FCA states that it will not compel panel banks to make LIBOR submissions after end-2021 simply to benefit firms which have failed, or continue to fail, to act on opportunities to transition.


The letter to asset managers does not introduce any new deadlines. It emphases existing targets and milestones set by the FCA, the Bank of England and the Working Group on Sterling Risk Free Reference Rates, and the impact these may have on asset managers' LIBOR transition plans. The milestones are:

  • Market makers are encouraged to change the market convention for sterling interest rate swaps from LIBOR to SONIA on 2 March 2020.
  • All firms should cease issuance by end-Q3 2020 of GBP LIBOR-based cash products maturing beyond 2021.
  • The Working Group will establish a clear framework to manage transition of legacy LIBOR products, to significantly reduce the stock of GBP LIBOR referencing contracts by Q1 2021.

The FCA expects firms to have a proportionate transition plan agreed by their governing body. If a firm has little or no LIBOR exposures or dependencies, a plan is not required but the FCA expects the firm's position to be reviewed periodically, with oversight from the Board.
The transition plan should:

  • carefully quantify all investments, operations and activities with LIBOR exposures and dependencies for a firm and its clients
  • consider how the firm will both remove or ameliorate existing exposures and dependencies in a timely manner and avoid creating new ones
  • include a strategy for keeping clients appropriately informed of such changes as they are developed and implemented

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