Working Group on Sterling Risk-Free Reference Rates

A working group of market participants with an objective of finalising the transition away from the interest rate benchmark LIBOR towards recommended risk-free reference rates.
*synthetic JPY LIBOR will cease at the end of 2022. Availability of synthetic GBP LIBOR is not guaranteed beyond end-2022.

Overview

The industry-led Working Group on Sterling Risk-Free Reference Rates (the Working Group) is finalising the transition away from LIBOR to SONIA (Sterling Overnight Index Average) in sterling markets, and to recommended risk-free rates in non-sterling markets. 

The Working Group is formed of a diverse group of market participants and trade associations representing relevant sectors and markets. It is chaired by Sarah Boyce (Association of Corporate Treasurers). The Bank of England and the Financial Conduct Authority (FCA) participate as ex-officio members and provide administrative support to the group.

You can read its:

Please note that views and outputs of the Working Group do not constitute guidance or legal advice from, and are not necessarily endorsed by, the Bank of England (including the Prudential Regulation Authority (PRA)) or the FCA.

Latest Working Group announcements and publications

February 2022

The transition away from LIBOR reached a critical step on 31 December 2021, as most LIBOR settings were published for the final time. The Working Group, Bank of England and FCA published a joint statement reflecting on achievements in sterling markets, setting out what more needs to be done and providing an update on how the Working Group will operate in the future.

December 2021

Update on contract continuity legislation to support the wind-down of critical benchmarks

On 15 December, the Critical Benchmarks (References and Administrators’ Liability) Act received royal assent and became law. The Act provides legal certainty as to how contractual references to a critical benchmark should be treated once the FCA provides for that benchmark to be published with a changed methodology. The Chair of the Working Group previously wrote to HM Treasury, seeking an update on the Government’s approach to safe harbour provisions following its earlier consultation. In May, the Economic Secretary to the Treasury, John Glen, responded confirming the Government’s plans to bring forward further legislation.

Statement encouraging continued focus ahead of end-2021

The Working Group published a statement urging the continued focus of market participants ahead of the cessation of most LIBOR panels at end-2021. The Working Group encourages firms to: use SONIA linked contracts, where appropriate, for all new business; continue to pursue active transition, where feasible, and; ensure readiness for upcoming operational events. Further, we highlight recent regulatory guidance on ceasing new use of USD LIBOR by end-2021, with some limited exceptions. 

 

Working Group papers by category 

Working Group background

The Working Group was originally set up in 2015 in response to the Financial Stability Board's recommendation to develop and adopt robust risk-free rates (RFRs) to provide an alternative to LIBOR-style reference rates.

In 2017, the Working Group published a white paper: SONIA as the risk-free rate and approaches to adoption. This paper proposed SONIA as the preferred alternative rate for sterling markets and sought feedback on the best approach to its adoption. It hosted an industry roundtable, which confirmed strong support for SONIA as the preferred sterling risk-free rate.

In view of concerns about the sustainability of LIBOR beyond the end of 2021, the Working Group was reconstituted at the start of 2018 with an extended mandate and broader participation, and focussed on catalysing a transition to using SONIA as the primary sterling interest rate across bond, loan and derivatives markets by the end of 2021. See the Working Group’s terms of reference from 2018 to 2022.

During this period, the Working Group benefitted from strategic support and senior engagement with firms through a Senior Advisory Group. You can read its terms of reference. The Senior Advisory Group met for the final time on 1 February 2022.

Following the successful cessation of the sterling LIBOR panel at end-2021, the Working Group concluded at its January 2022 meeting that it had met its objective to “catalyse a broad-based transition to SONIA across sterling derivative, loan and bond markets”. It was however noted that there remains further work to be done to finalise the transition from LIBOR, including the continued active conversion of legacy sterling LIBOR-linked bonds and loans dependent on temporary synthetic LIBOR; and to consider any implications of non-sterling LIBOR transition in UK markets.

It was decided that the Working Group would move forwards in an amended form with new objectives, and with continued support from the Bank of England and FCA. Please see the Working Group’s updated terms of reference for more information.

You can keep up to date by following the Working Group LinkedIn page.

Membership

The membership of the Working Group includes banks and dealers, investment managers, non-financial corporates and other sterling issuers, central clearing counterparties and trade associations.

We have published the full list of member firms and membership selection criteria

The Working Group invites further expressions of interest in participating in transition work either as members of technical Sub-Groups or Task Forces to share views on aspects of the transition.

This includes expressions of interest from professional services firms, in particular law firms and financial consultancies where the work would be on a pro bono basis to provide expert input to the Working Group and related Sub-Groups and Task Forces.

For more details, or to express an interest in participating in any of the Working Group’s work, please contact RFR.Secretariat@bankofengland.co.uk.

This page was last updated 14 June 2022

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