Moscow Exchange will end new deals using Libor in 2021, says central bank

Credit: REUTERS/SHAMIL ZHUMATOV

The Moscow Exchange will stop using the Libor interest rate benchmark in 2021, replacing it with other rate indicators, the Russian central bank said on Wednesday.

MOSCOW, July 29 (Reuters) - The Moscow Exchange will stop using the Libor interest rate benchmark in 2021, replacing it with other rate indicators, the Russian central bank said on Wednesday.

The process of ending the London Interbank Offered Rate's benchmark role is one of the biggest challenges faced by financial markets in decades.

Countries around the globe are gradually ending use of the rate after banks were fined billions of dollars for trying to rig the benchmark, still used in financial contracts worth up to $400 trillion globally.

The Moscow Exchange MOEX.MM is expected to stop using Libor in standardised derivative contracts in 2021, said the central bank, which has an 11.8% stake in Russia's largest bourse.

This year, open positions in cross-currency and interest rate swaps based on Libor on the Moscow Exchange stood at 51.6 billion roubles ($711.35 million), remaining unchanged since the second quarter of 2019, the central bank said.

In the third quarter, the Moscow Exchange will start expanding the array of benchmark rates it uses in derivatives contracts, including rates such as SOFR, €STR and SARON to replace Libor, the bank said.

Russia's interbank market for contracts based on Libor is much bigger. As of June 1, the amount of such deals reached $19.3 billion, up from $14.7 billion in late 2019, according to the central bank data. ($1 = 72.5383 roubles)

(Reporting by Elena Fabrichnaya, Writing by Andrey Ostroukh; editing by Emelia Sithole-Matarise)

((andrey.ostroukh@thomsonreuters.com; +7 495 775 1242;))

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