Her Majesty's Treasury is seeking views from financial services firms to establish whether safe harbor legislation is needed in the U.K. to prevent lawsuits stemming from the cessation of the London interbank offered rate.
In a consultation launched Monday, the U.K. finance ministry said it wants input on the new U.K. Financial Services Bill regarding the LIBOR transition. The bill was introduced Oct. 21, following the U.K.'s departure from the European Union in early 2020.
The Treasury is asking if the bill, which outlines rules for the elimination of critical benchmarks, including LIBOR, should be supplemented with more legislation to ensure a smoother transition away from the benchmark rate.
The proposal to create safe harbor legislation refers to legacy contracts that may still reference LIBOR or an unsuitable alternative starting next year.
LIBOR is used as a performance benchmark in investment management strategies and as a base rate to price the underlying instruments of these strategies.
The comment period for the consultation closes March 15.
The FCA will separately consult with the industry to specify which legacy contracts should be caught by the supplementary legislation.