The Financial Services Act 2021
In order to address the risk that LIBOR cessation poses to tough legacy contracts, the Government has passed legislation as part of the Financial Services Act 2021 (the "FS Act 2021"). This legislation amended the BMR to provide the FCA with new and enhanced powers to oversee the orderly wind-down of a critical benchmark.
	A detailed description of this legal framework is set out in paragraphs 43-51. Importantly, the BMR, as amended by the FS Act 2021, grants the FCA new powers to "designate" a critical benchmark, under Article 23A of the BMR, where it determines that the benchmark no longer accurately represents the underlying market or economic reality it seeks to measure or is at risk of no longer doing so, and the "representativeness" of the benchmark cannot or should not be maintained or restored.
	Where the FCA "designates" a critical benchmark under Article 23A of the BMR, all use of that benchmark in financial contracts and instruments within the scope of the BMR is prohibited, once the designation comes into force. However, the FCA then have the power to allow certain tough legacy contracts that referenced the benchmark before its use was prohibited to continue to use the benchmark. This means that certain exempted tough legacy contracts will be able to continue using the benchmark after its designation.
	Where the FCA "designates" a critical benchmark, it is also able to impose certain requirements on the administrator of that benchmark. This includes the power to direct the administrator of the benchmark to change how the benchmark is calculated (including to put in place a methodology that for example does not require panel bank submissions), the rules of the benchmark, or its code of conduct. The FCA also has the power to compel the administrator of a critical benchmark to continue publishing the benchmark for up to 10 years.
	Taken together, these powers allow the FCA to provide for the continued publication of a critical benchmark for use in permitted contracts for a limited period of time. In the case of LIBOR, this would allow the FCA to compel continued publication of LIBOR using a revised methodology, known as "synthetic LIBOR", and permit certain legacy contracts to continue to use the benchmark in its synthetic form. The amended BMR also clarifies that the FCA may exercise these powers at the level of each version of a benchmark, meaning the FCA can determine whether or how to use its powers independently for each of the 35 LIBOR versions.
	On 5 March 2021, the FCA announced 8 the dates on which all 35 LIBOR settings would either cease to be published or no longer be representative. The FCA has been clear that where it designates a benchmark and exercises its powers to require its continued publication under a revised methodology, the benchmark will be unrepresentative of the economic or market reality that it has previously measured. The intended wind-down plan for each LIBOR currency is set out in Table 1.
	Table 1: Announced wind-down procedures for all LIBOR currencies.
	LIBOR currency-tenor pair
Wind-down plan (as announced on 5 March 2021)
EURO
All settings will cease to be published immediately after end-2021.
Swiss Franc
All settings will cease to be published immediately after end-2021.
Japanese Yen
All settings will become unrepresentative at end-2021.
On 24 June 2021, the FCA published a consultation on using its powers to provide for continuation of 1-month, 3-month and 6-month JPY LIBOR settings for 1 additional year, to end-2022.
GBP Sterling
All settings will become unrepresentative at end-2021.
On 24 June 2021, the FCA published a consultation on using its powers to provide for the continuation of 1-month, 3-month and 6-month Sterling LIBOR settings.
US Dollar
1-week and 2-month USD LIBOR will cease to be published immediately after end-2021.
All other USD settings will continue to be published using ongoing panel bank contributions until end-June 2023.
The FCA will continue to consider the case for using its powers to provide for the continuation of certain USD LIBOR settings.
	Following a public consultation, in March 2021, the FCA issued two statements of policy setting out whether and how it intends to exercise its powers under the BMR to designate a critical benchmark as an Article 23A benchmark and to require an administrator to change how a benchmark is calculated.
	On 16 November 2021, the FCA set out which legacy contracts will be permitted to continue using LIBOR after it has been designated, and where the FCA has required the administrator to continue publication of the benchmark with a synthetic methodology.