LIBOR will cease as a financial market benchmark rate on Friday, June 30, when the US dollar LIBOR panel winds up its activities and all use of US dollar LIBOR settings will be prohibited. It marks the end of a process to move on from reliance on IBOR rates that started in 2017, when market authorities decided the financial system needed more robust benchmark rates. IBORs – interbank offered rates - were calculated using prime bank exposures, based on transaction data or live executable prices. Regulators were concerned that IBORs could be illiquid and could be manipulated. Most IBORs went out of commission at the end of 2021, when they were replaced by alternative reference rates. Change has taken longer in the US due to regulatory and market factors. UK LIBOR was replaced by the Sterling Overnight Index Average (SONIA). The US equivalent is SOFR – the Secured Overnight Financing Rate. The Australian equivalent is AONIA – the AUD Overnight Index Average, which is effectively the RBA overnight cash rate. The Australian financial market is in the unusual situation of being a multi-benchmark rate environment. The established interbank offer rate, the bank bill swap rate, will continue to be used alongside AONIA. The Reserve Bank has said BBSW remains robust, although it has some concerns about the liquidity of one-month BBSW. Local regulators are leaving it up to market participants to decide what local reference rate they use, except in certain situations, such as the issue of securities that are repo eligible. At the moment, most are sticking with BBSW. The IBOR Transformation Australian Working Group issued a statement earlier this month, saying that firms needed to deploy transition tools ahead of the cessation of US LIBOR.