The Financial Conduct Authority has published a set of priorities that it says needs to be taken into account regarding the switch from Libor to Sonia, due to take place on 2 March 2020.

These include stopping the issue of cash products linked to GBP sterling by the end of Q3 2020, making sure that Sonia is “easily accessible and useable,” moving to the new market convention in derivative markets, and initiating a framework to move legacy Libor products across by Q1 2021.

The bank says that, with Sonia swaps exceeding £4.5tn per month over the last six months, the new market convention has a notional value equal to that of Libor.

It adds that “appropriate” Libor contracts are limited today, and this will reduce further towards the end of 2021 – a risk factor that market participants should both be aware of “and take appropriate steps to establish their clients are too”.

FCA director of markets and wholesale policy Edwin Schooling Latter says: “We have seen great progress in the development of the Sonia derivatives market. I encourage all market participants to join the initiative to put Sonia first over Libor from 2 March.

“This should help make Sonia the market standard in sterling swaps as is already the case in the bond market.”

The Bank of England executive director for markets Andrew Hauser adds: “This move toward a much greater use of Sonia in the sterling derivatives market builds on the strong foundations established in recent years and demonstrates a strong continuing partnership between UK authorities and market participants to bring about a decisive shift away from use of Libor ahead of end-2021.”