and further de - risking sterling markets. more detailed material on both has been published this morning on our website. 10 in the rest of my remarks today, i want to take stock of progress so far, and explain how our new initiatives will work. progress in sterling markets : derivatives instruments as this isda audience will know well, by far the largest sterling libor exposures come from derivatives positions – and progress here has been good. swaps account for the lion ’ s share of sterling derivatives, by notional value – and last year approximately half of new cleared sterling swaps referenced sonia. that ’ s some £4 trillion a month. that ratio rose to more than two - thirds in january this year, amidst a sharp rise in trading of expectations on the outcome of that month ’ s monetary policy decision ( figure 2 ). that demonstrates the depth of liquidity in the market to absorb additional interest. but we can ’ t rest on our laurels – sonia usage still needs to be higher. for some time there has been a sense that progress could be accelerated if a way could be found to overcome the potential ‘ first mover ’ challenge for intermediaries otherwise keen to switch. for that reason, and following consultation with the industry, the bank and fca have strongly encouraged market makers to use sonia as the standard reference rate for sterling interest rate swaps from 2 march 2020 – that ’ s next monday. from then, market makers should consider sonia first. www. bankofengland. co. uk / - / media / boe / files / paper / 2019 / the - boes - risk - management - approach - to - collateral - referencing - libor - for - use - inthe - smf www. bankofengland. co. uk / speech / 2020 / andrew - hauser - isda - sifma - amg - benchmark - strategies - forum - 2020 all speeches are available online at www. bankofengland. co. uk / news / speeches 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

turbo - charging sterling libor transition : why 2020 is the year for action – and what the bank of england is doing to help speech given by andrew hauser, executive director, markets international swaps and derivatives association / sifma asset management group benchmark strategies forum, london wednesday 26 february 2020 i am grateful to sarah hall for co - writing this speech – and to amber evans, alastair hughes, wayne leslie, will parry, rhys phillips, edwin schooling latter, dave ramsden and francesca zwolinksy for their advice and comments. all speeches are available online at www. bankofengland. co. uk / news / speeches introduction 2020 is a critical year for libor transition. great progress was made in 2019, particularly in sterling wholesale markets – and i want to give special thanks to the part that isda ’ s support and leadership has played in that. but, with the finish line for libor now clearly in view, there is still a lot of ground to cover – particularly in the cash markets. we need to see another decisive acceleration in effort in 2020 to ensure risk - free rates are adopted across the full range of sterling business, and libor is left behind for good. the motor racing analogy is apt, because libor transition is complex, fast - paced and – above all – a team effort. the green lights came on some time ago, and the private sector has been decisively – and rightly – leading from the front. the chronic lack of underlying transactions1 means that libor is simply too fragile a benchmark to support a sustainable business model – indeed its continued existence poses material risks to financial stability, both in the uk and globally. that ’ s why in the race to say goodbye to libor, it is firms ’ own business leads, project managers and subject matter experts that are designing and driving the cars, supplying the tyres, and running the pit crews – re - engineering systems, innovating new financial products and services, and delivering them to customers. but it ’ s not just a firm - by - firm effort : it ’ s cross - market too. under the leadership of tushar morzaria, barclays ’ cfo, the sterling risk free rate working group and its various offshoots have brought together over 200 industry experts to solve collective problems. that includes setting the route map to the chequered flag – the latest version of which was released in january ( figure 1 ). 2 amongst many