With the 31 December 2021 deadline rapidly approaching, the move away from sterling LIBOR has reached its last stages. Though some final steps remain, an extensive collective effort has helped the sterling market lead the way internationally on the global transition.

Since setting up a project team in 2019, UK Finance has worked with over 100 impacted member firms across our various product streams on the implications of the transition. With the imminent end of sterling panel bank LIBOR in sight, this is a good time to reflect on some of the industry's key collective achievements from the past two years.

Under the auspices of the national Working Group on Sterling Risk-Free Reference Rates and working closely with the regulators, the UK's transition has been marked by impressive cross-industry collaboration. This has included developing and iterating a ?roadmap? to get us to this point, which was rightly and helpfully amended as required during the height of the Covid-19 disruption during 2020. The group developed loan conventions for use of the ?risk-free? rate SONIA, use cases to help the market segments determine appropriate replacement rates, and monitored the development and publication of forward-looking SONIA term rates.

These enablers subsequently helped make possible the deadlines earlier this year to cease new issuance of any sterling LIBOR contracts that would mature beyond the end of 2021. This milestone was met smoothly by the industry, and figures recently published by the Financial Conduct Authority (FCA) reveal that SONIA-linked lending has since surpassed £100 billion across a wide range of facilities.[1]

Though turning off the sterling LIBOR tap was no small feat, arguably the bigger hurdle to overcome has been legacy transition. Banks and lenders have been working hard to ensure transition is communicated to customers with existing LIBOR facilities, and that where necessary end users are engaged to agree next steps. We collaborated with our end user representatives to support this outreach.[2]

As a result of the banking and finance industry's efforts, the majority of sterling legacy contracts will be migrated on or before 31  December. However, there will remain a limited outstanding pool of contracts that cannot be amended ahead of this date. Significant work has been undertaken to identify and recommend a legislative solution for these contracts, which has taken shape as the Financial Services Act 2021 and subsequent FCA policy. Securing this broad safety net for the vast majority of legacy LIBOR contracts after year-end was for many the final piece to a smooth transition, removing any risk of a cliff edge.

By working closely together, and in collaboration with the regulators, government and business groups, the industry has navigated an incredibly significant and challenging change as panel bank sterling LIBOR ceases. While it remains important to complete the final steps, the industry can be proud in all it has achieved in preparation for the end of 2021. Both the industry and its customers can now look forward with confidence to a world of robust alternatives to sterling LIBOR.