Today marks the end of Q1 and with it the most significant landmark of the LIBOR transition to date. From tomorrow, the taps will be turned off for sterling LIBOR contracts* that expire post end-2021. This means that all future loans, bonds and other products expiring after the end of this year will need to be based on SONIA or other non-LIBOR alternatives.

This milestone, coupled with the official confirmation from the Financial Conduct Authority (FCA) that sterling LIBOR will no longer be representative from 31 December 2021, has only reinforced the message that there will be no going back. Financial services firms and businesses alike are encouraged to proceed with their transition plans.

Widespread preparation has been taking place across the industry. UK Finance member banks and lenders have been working hard to equip their systems for alternative interest rates and roll out new products for borrowers. For some markets, this shift to alternative rates for new lending has already taken place long ahead of today's milestone, and the focus is now on the last significant hurdle.

While there has been momentous progress in preparing for this change, with access to funding remaining a critical priority, firms will be working with customers to help find alternative solutions where needed, but in a way that still achieves the Q1 milestone. One example is the use of a fixed rate, an alternative floating rate or a short-term LIBOR-linked facility that expires before the end of 2021, that will all ensure firms can continue to support borrowers while avoiding the risk of obstructing transition progress. We anticipate however that we will now see SONIA take its identified place as the sterling risk-free replacement rate in the overwhelming majority by value of new lending contracts, as it has already in other products.

The Q1 milestone has also represented a helpful stepping stone in initiating customer engagement on transition, which highlights the importance of communication for the industry. Representing a collective industry interface with the business community, UK Finance is working to continue to cascade information to ?end users?. Over the past weeks we have published a set of FAQs on LIBOR transition aimed at retail mortgage customers, as well as a simple introductory guide to help smaller businesses affected by the transition which has been distributed to over 100 trade bodies, media publications and industry stakeholders.

As we move forward into Q2 there will need to be a continued emphasis on international coordination between global bodies and jurisdictions. The market is now faced with diverging timelines across currencies, and seeking consistency of international approach will offer clarity on the steps needed globally to achieve a smooth and timely transition. Given the tremendous progress achieved so far in the sterling market, it is hoped that the UK will continue to serve as a positive example internationally, especially as we tackle the legacy complexities of the transition over the coming months.

Although the market continues to navigate the impact of Brexit and the pandemic, the significance of this momentous milestone should not be overlooked. As we enter the final nine months of the transition, UK Finance remains committed to ensuring that both lenders and borrowers are well-informed and engaged on developments in order to facilitate a smooth departure away from LIBOR.

For more information please email the LIBOR Transition project team at liborcoreteam@ukfinance.org.uk. In addition to its introductory guide, please also see UK Finance's detailed guide on the discontinuation of LIBOR.

* LIBOR linked non-linear derivative contracts that expire after the end of 2021 can still be issued until end-Q2 2021