blue globe


LIBOR reform

Repapering with a competitive edge

While repapering contracts is not a new phenomenon, financial institutions may face a colossal task of identifying and inventorying the contracts that need to be transitioned from LIBOR to alternative reference rates (ARRs) in a timely manner. Replacing LIBOR will impact a significant number of financial agreements. Identifying impacted agreements across many products and business areas, understanding remediation approaches, and analyzing the terms of the agreement for fallback provisions will require a significant amount of work and risk.

Common repapering challenges

In July 2017, the UK Financial Conduct Authority announced it would transition away from London Interbank Offered Rate (LIBOR) and no longer compel banks to submit to LIBOR after 2021. And though LIBOR may be the most significant Interbank Offered Rate (IBOR), transitioning away from other IBORs is also on the regulatory agenda.

The disruption of LIBOR challenges organizations to understand whether their agreements contain robust fallback provisions. Since few market participants anticipated the permanent cessation of LIBOR, key fallback provisions in contracts were potentially never extracted, captured, and stored in an easily accessible central repository. Instead, fallback language is typically embedded within the terms of lengthy agreements across multiple storage locations. This, along with the need to analyze the fallback language for acceptability and robustness during a transition to ARRs across practice areas, makes scoping and remediation an extensive exercise.

Libor Reform: Repapering with a competitive edge

Considerations for a LIBOR repapering program

Given the diversity of products and number of contracts impacted by LIBOR transition, a wait-and-see approach may be unwise. At Deloitte, we believe that an organization’s repapering preparedness journey can be split into six distinct phases:

  • Planning
  • Scoping
  • Program design
  • Outreach
  • Negotiation
  • Execution

Download to see examples of activities and considerations at each phase.

blue circle

dTrax is designed to help organizations during LIBOR transition

Deloitte’s dTrax, an AI-enabled contract lifecycle management tool, provides end-to-end scoping, outreach, and remediation process. Using NLP to extract and integrate contract-related data with business data, dTrax provides standardized templates, first-draft automation, and workflow management of the negotiation process—streamlining the contract management process by helping organizations execute contracts in one place.

Extract information from contracts. dTrax NLP can extract and integrate contract-related data with business data.

Generate and negotiate amendments automatically. Using the power of AI, dTrax is designed to reduce cycle time and streamline the contract management process.

Work according to your needs. dTrax can be configured to meet an organization’s specific needs.

Provide end-to-end reporting. Tailored specifically to an organization’s needs, dTrax provides real-time reporting on end-to-end scoping, outreach, and remediation processes for IBOR transition programs.

Feed data to downstream systems. By developing broad data models within documents, dTrax feeds data to downstream systems with the negotiated terms.

honey bee globe
Did you find this useful?