UK watchdog proposes temporary "synthetic" yen and sterling Libor

LONDON (Reuters) - Britain's financial watchdog said on Thursday it was proposing to temporarily allow a "synthetic" version of some yen and sterling-denominated Libor interest rates.

The London Interbank Offered Rate or Libor is being scrapped at the end of December, but to avoid disruptions to contracts that cannot be quickly moved to alternative rates in time, the Financial Conduct Authority said it would allow some Libor rates to continue temporarily in "synthetic" beyond that date.

Synthetic refers to an alternative rate being adapted in some form.

"We remind market participants that any synthetic Libor will be time-limited and is intended as a safety net only for contracts that cannot transition," the FCA said in a statement.

"We encourage market participants to continue active transition away from Libor wherever practicable and in line with relevant industry milestones, and not to delay their plans by waiting for a potential ‘synthetic’ solution."

(Reporting by Huw Jones; editing by Carolyn Cohn)

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