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Phasing Out LIBOR after 2021: Notes and Legal Considerations Concerning the Cross Industry Committee on Japanese Yen Interest Rate Benchmark’s Public Consultation Paper

In July 2017, Andrew Bailey, Chief Executive of the UK Financial Conduct Authority, declared that the authority would no longer persuade or compel panel banks to make LIBOR (London Interbank Offered Rate) submissions after 2021. As submissions are necessary for the creation of LIBOR, which is widely referenced to determine applicable interest rates in financial transactions, concern has increased among market participants that LIBOR itself would not exist after 2021.

In Japan, the issue of LIBOR discontinuation led to the establishment of a Cross Industry Committee on Japanese Yen Interest Rate Benchmarks in August 2018. The Committee published the Public Consultation on the Appropriate Choice and Usage of Japanese Yen Interest Rate Benchmarks in July 2019.

In our newsletter, we will discuss the Japanese response by presenting the main points of this committee’s consultation paper and consider the legal issues anticipated to derive from their suggestions.

This article is also available in Japanese.

 

Authors

濃川 耕平

He has an extensive track record representing issuers, managers and selling shareholders in various capital markets transactions, incduling global IPOs, global follow-on offerings, convetibles bonds offerings, debt offerings, private investments in public companies (PIPEs), J-REITs offerings. He also has been active in fincance transactions by venture companies.

有吉 尚哉

His extensive experience includes securitization transactions regarding a wide variety of receivables and other asset classes as a legal counsel for originators, arrangers, and trustees, and he has worked on structured finance transactions involving various schemes, including those achieved for the first time ever in Japan. He has a great deal of experience engaging in the development of new trust products and complicated trust schemes. As he has worked at the Corporate Accounting and Disclosure Division, the Planning and Coordination Bureau, the Financial Services Agency of Japan, and also has experience engaging in the planning of the financial regulations there, he has provided advice to many financial institutions, including banks, trust banks, securities firms, insurance companies, and nonbanks, as well as business companies and start-ups which enter the financial businesses. He also has a great deal of experience advising companies with respect to the application of the financial regulations on novel transactions or products, including FinTech areas. He has a wealth of experience participating as a member of various study groups and working groups, including government and academia conferences, and has frequently written and spoken on a wide range of topics involving legal systems and finance practice; thus, he is recognized as an opinion leader in the field of finance law.

山本 俊之

Since 2009, as an attorney in the firm’s finance team, Toshiyuki has been handling various financial transactions and financial regulatory/compliance matters, with a focus on asset management and derivatives, his main practice areas. He advises both domestic and foreign asset managers, financial institutions, and corporates on financial regulation matters in the asset management and derivatives spaces, as well as on contract drafting, regulatory analyses, and development of internal controls for new product launches. Further, he has been involved in numerous cross-border finance transactions and investment transactions by fund operators. Recently, his practical experience expanded to the FinTech space, such as digital securities, and he has been publishing articles and giving presentations on artificial intelligence/machine learning in relation to finance industries. In addition to finance matters, he has extensive experience in handling regulatory defense matters and foreign class actions in cooperation with foreign law firms. Prior to being registered as an attorney-at-law in 2009 and joining the firm, he worked at a Japanese credit rating agency and the Tokyo arm of a U.S. investment bank as a credit analyst in the securitization space. He is a Certified Member Analyst of the Securities Analysts Association of Japan and a Certified International Investment Analyst.