Finance

Here's a brief snapshot of what to expect during the remainder of this year:

• LIBOR: 2024 brings further IBOR reform milestones. Crucially, three-month sterling LIBOR was published for the last time on 28 March 2024. This means that there will be no sterling LIBOR rate (for any tenor) quoted after this date. Likewise, US dollar LIBOR will cease publication at the end of September 2024. Both rates had, of late, only been quoted on a synthetic basis (no longer relying on submissions from panel banks). It seems like we've been talking about LIBOR cessation planning for a long time; most parties will have made appropriate future-proofing arrangements to reflect this anticipated development. Nevertheless this 'cliff edge' event could lead to disputes about the appropriate substitute rate in all kinds of legacy contracts. Read this briefing for more.
  
  
• The International Organization of Securities Commissions is soon expected to finalise a new set of good practices in the leveraged loan and collateralised loan obligations markets.
  
  
• The Financial Collateral Arrangements (No 2) Regulations 2003 are amongst a range of provisions due to be repealed under the framework for the revocation of all EU retained law relating to financial services established by the Financial Services and Markets Act 2023. There is currently no information on timing, but we are told the FCARs will not be repealed until suitable replacement legislation has been drafted. For more, read Financial Services and Markets Act 2023: Building a Smarter Regulatory Framework in the UK? | Travers Smith

During February 2024, a rogue individual reportedly e-filed 800+ erroneous MR04 "Satisfaction of charge" statements at Companies House against genuine company charges, making it look as if the security granted by those companies might have fallen away. This was reportedly the work of one individual, who mistakenly believed that the businesses owed him funds.

Such filings do not operate to release security. Instead, security will only fall away when the underlying debt is actually satisfied and/or where security is formally released by the secured creditor. Nevertheless, the fraudulent filings caused considerable concern in the loan markets. The registrar was fortunately able to make use of its new powers under ECCTA to rectify the charges registers of affected companies without the requirement of a court order. However, one of the unfortunate truths exposed by this episode is that, just because a charge is marked "satisfied" at Companies House, this does not protect an incoming creditor. In response to this episode, lenders may decide to improve their due diligence procedures when lending new debt. Corporate borrowers may have to show deeds of release for previous charges, even where the Companies House register suggests that such charges are "satisfied". For more on the rules for registration of company charges, see our related article in the Journal of International Banking and Financial Law.

Planned reforms to EMIR this year will impact all users of derivatives in the EU (and, indirectly, UK and other non-EU users of derivatives that face EU counterparties), especially banks, investment firms and asset managers. 

Financial institutions should be looking to build the rule changes into their operations and expect enhanced scrutiny in some areas where, historically, non-compliance has been most widespread.

The UK's version of EMIR is also being revised to align with the EU. The opportunities for arbitrage between the EU and UK rules are likely to be limited, but there will be an increased compliance burden for businesses with a multi-jurisdictional footprint. Read this briefing for more.