Fed-sponsored panel overseeing Libor transition sees inadequate derivative market volume

5 August 2019 3:36pm
The US Federal Reserve-sponsored panel overseeing the transition from Libor sees the derivative markets for the preferred new benchmark as currently lacking enough volume to serve as the basis for a forward-looking replacement rate, a global authority said.

However, the International Organization of Securities Commissions noted expectations that a forward-looking rate would become available by the 2021 transition deadline if it can draw from derivative markets that are now developing liquidity.

Iosco’s statement this week cited a report by the Fed-sponsored Alternative Reference Rate Committee expressing optimism about the development of liquid Secured Overnight Financing Rate derivative markets. The April report added: “But the timing cannot be guaranteed.”