ICE Proposes Plan for U.S. Dollar Libor Cessation

Intercontinental Exchange, which administers the London Interbank Offered Rate, today proposed a plan to cease publishing U.S. dollar Libor after the end of 2021. Under the plan, ICE would stop publishing the one-week and two-month settings of USD Libor immediately after Dec. 31, 2021, and cease publishing remaining Libor settings on June 30, 2023—providing time for most legacy Libor-referencing contracts to mature. The long-expected move by ICE comes as part of the broader industry transition away from Libor toward more robust alternative rates. ICE requested feedback on its plan by the end of January 2021.

The U.S. banking agencies welcomed ICE’s proposal, with Federal Reserve Vice Chairman for Supervision Randal Quarles saying it “ensures that the transition away from Libor will be orderly and fair for everyone—market participants, businesses, and consumers.” Despite the extended cessation timeframe for certain Libor tenors, the agencies emphasized that banks should “transition away from USD Libor as soon as practicable.”

“Given consumer protection, litigation, and reputation risks, the agencies believe entering into new contracts that use USD Libor as a reference rate after December 31, 2021, would create safety and soundness risks and will examine bank practices accordingly,” the agencies said in a joint statement. “New contracts entered into before December 31, 2021 should either utilize a reference rate other than Libor or have robust fallback language that includes a clearly defined alternative reference rate after Libor’s discontinuation.” The statement recognized a few “limited circumstances” when it may be appropriate for banks to enter into new Libor contracts after 2021.