We already know that new loans and bonds can be issued without the index, based on the range of existing risk free rates and conventions already used in different markets. The SONIA Compounded index will provide an additional, optional tool to complement these, and firms can plan on the basis that the index will be ready to use ahead of the 2020 Q3 target for ceasing new LIBOR issuance. 14  FRBNY will commence publication of its SOFR Index on 3 March: www.newyorkfed.org/markets/opolicy/operating_policy_200212 8  All speeches are available online at www.bankofengland.co.uk/news/speeches  8  FIGURE 3: Overnight Rates, Compounded Index and Compounded SONIA Rates 15  Some market participants may like us to go one step further by producing daily ‘screen rates’ for one or more specific period averages – for example 6-month, 3-month or 1-month compounded SONIA rates. Illustrative snapshots of those averages are shown at the bottom of Figure 3. But for screen rates to be of use and drive transition in sterling markets, the specific set of published rates would need to be simple, widely accessible, and based on a clear consensus from the market on the preferred convention to be used. Publishing a large number of alternatives could risk undermining the very certainty that borrowers need. So, in addition to announcing the index, we are today opening a consultation on whether there is sufficient market consensus for production of a given set of simple period averages, giving market participants the choice between a small number of alternative options.

9  www.bankofengland.co.uk/-/media/boe/files/paper/2019/the-boes-risk-management-approach-to-collateral-referencing-libor-for-use-inthe-smf 10 www.bankofengland.co.uk/speech/2020/andrew-hauser-isda-sifma-amg-benchmark-strategies-forum-2020 4  All speeches are available online at www.bankofengland.co.uk/news/speeches  4  FIGURE 2: SONIA vs LIBOR Linked Trading Flow Volumes (January 2020)  Floating rate notes**  Swaps  Futures  Sources: Bloomberg Finance L.P., CME Group, CurveGlobal, ICE and LCH Group * Incremental increase in January 2020 from average SONIA flows in 2019 ** Maturing post-2021  This should put the brakes on further increases in the stock of sterling LIBOR swaps maturing beyond 2021 – a metric the FPC has been monitoring closely. And that number should start to go into reverse as contracts mature and others follow the early lead of firms like Nationwide and Legal & General Investment Management – which have publicly switched their balance sheet and client positions respectively to SONIA. As I announced last year, the UK’s foreign exchange reserves also now transact only in SONIA-linked contracts.11  Even with these sorts of steps, we cannot be sure that the stock of LIBOR-linked swaps will fall to zero in a timely way – and that leaves the system exposed. That’s where ISDA’s work on fallbacks comes in. While my remarks today focus on new business, I want to thank ISDA for its work – it is a major achievement to have reached consensus on both the structure and the parameters of a market-wide fallback for LIBOR cessation. We welcome the intention to re-consult on the provisions for pre-cessation fallback, and look forward to working with you to deliver on that.