Regulators in Australia are reiterating the importance of ensuring a timely transition away from the
London Interbank Offered Rate (LIBOR). This requires ceasing the use of LIBOR in new contracts before
the end of 2021.

On 2 June 2021, the Financial Stability Board (FSB) announced that all new use of LIBOR benchmarks
should cease as soon as practicable and no later than the timelines set out by home authorities and/or
national working groups in the relevant currencies. In particular, even though some USD LIBORs will
continue until mid-2023, the US Banking Supervisors have stated that firms should cease entering into
new contracts that use USD LIBOR as a reference rate as soon as practicable and in any event by no later
than 31 December 2021.

The FSB also released:

• an updated Global Transition Roadmap for LIBOR incorporating the confirmed LIBOR cessation dates and
  transition milestones set across the different LIBOR jurisdictions
• a statement encouraging the adoption of overnight risk-free rates where appropriate, rather than
  waiting for the development of additional tools, in particular forward-looking term risk-free
  rates
• a statement supporting the use of the ISDA spread adjustments in cash products.

ASIC, Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia (RBA),
support the guidance and expectations set by the FSB and the US Banking Supervisors.

Continued reliance on LIBOR poses significant risks and disruptions to the stability and integrity of
the financial system. Firms themselves may also face financial, conduct, litigation, and operational
risks associated with inadequate preparation.

ASIC, APRA, and the RBA expect all market participants to adhere to the deadline at the end of 2021 for
the issuance of new LIBOR contracts. They should also accelerate the active conversion of legacy LIBOR
contracts.

ASIC Commissioner Cathie Armour said, ‘Firms should, as soon as practicable, stop the sale and
issuance of LIBOR-referenced contracts that expire after their relevant cessation dates and most
importantly, stop offering new LIBOR products after the end of 2021.’

RBA Assistant Governor (Financial Markets) Christopher Kent said, ‘Firms should not waste any
time in moving away from LIBOR. The end date for LIBOR is clear and pending. Continued use of LIBOR
after the end of 2021 poses significant risks to firms. There should be no new use of LIBOR –
including USD LIBOR – after the end of 2021.’