Sector developments and company hires

RFC issued on benchmark regulation powers
The UK FCA has published a consultation on its proposed policy framework for exercising two of its new powers under the Benchmarks Regulation (BMR), which will be introduced by the Financial Services Act 2021. These powers aim to facilitate an orderly wind-down of critical benchmarks like Libor and help users that cannot transition to a replacement benchmark before the Libor panels end.

The FCA has already established its policy framework for exercising its new powers to require continued publication of critical benchmarks using a changed methodology, and when it could access those powers. Soon it will be consulting on using those powers to implement a ‘synthetic Libor’ rate for some sterling and yen Libor settings.

Where a synthetic Libor rate is implemented, the FCA will also need to determine who is permitted to use it. This is because use of a permanently non-representative benchmark would be prohibited under the BMR, but the FCA can permit some or all legacy use to continue.

The FCA says it will finalise its policies in light of the feedback received. It will then aim to consult in Q3 on its proposed decisions on precisely what legacy use to allow for any synthetic sterling and yen Libor, as well as how it might restrict new use of Libor rates, including US dollar Libor. The FCA intends to confirm its final decisions as soon as practicable in Q4.

In other news…

Benchmark replaced on first CRE CLOs
KBRA reports that the Libor benchmark in two of its rated US CRE CLOs, AREIT 2020-CRE4 and BXMT 2020-FL3, has been replaced by SOFR. The designated transaction representative on the two deals, Wells Fargo, has determined that a benchmark transition event occurred as a result of ICE Benchmark Administration’s recent announcement (SCI 8 March) and that the benchmark replacement date will be 15 June 2021.

EMEA
Marcel Grandi has joined Twelve Capital’s Zurich office as senior advisor, ILS, responsible for supporting the investment team with the sourcing of ILS transactions. He has extensive experience in the ILS space, having spent 13 years with Credit Suisse ILS and 10 years with Munich Re in various senior functions.

North America
W R Berkely has appointed Vincent Myers vp - alternative capital. He was previously head of third-party capital at AXIS Capital and has also worked at Rewire Holdings and Swiss Re.