color splash

Perspectives

LIBOR transition resources

Latest news and strategies for LIBOR transition

Regulators in the US and abroad have indicated that firms will likely need to transition from LIBOR by the end of 2021. LIBOR impacts organizations in numerous ways, from LIBOR-based loans to core operating processes. This page serves as a one-stop shop for the latest on the LIBOR transition.

Banking and securities regulators remind institutions to prepare for LIBOR discontinuation | July 15, 2020

As the December 2021 deadline for the discontinuation of LIBOR approaches, US financial institutions and regulators are preparing for a transition to alternative reference rates. Banking and securities regulators have made LIBOR transition a supervisory priority for 2020 as noted in their respective communications.

  • On July 1, 2020, the Federal Financial Institutions Examination Council (FFIEC) issued a Joint Statement on Managing the LIBOR Transition (Joint Statement). Notably, this is not issued as supervisory guidance, but rather a statement that lists a range of LIBOR transition considerations.
  • On July 1, 2020, the Office of the Comptroller of the Currency (OCC) issued its bulletin (2020-68) which expanded on the FFIEC statement by providing banks, particularly community banks, with additional guidance for identifying applicable risks, planning, and successfully transitioning to replacement rates.
  • In their fall 2019 Supervision and Regulation Report and Semiannual Risk Review, the Federal Reserve Board (FRB) and the OCC, respectively, identified the LIBOR transition as an examination priority for 2020. The regulators encouraged firms to be aware of implementation dates, vendor management and data implications of the transition.

Our latest article explores the key takeaways of these communications as the LIBOR discontinuation deadlines approaches.

Back to top

Banking and securities regulators remind institutions to prepare for LIBOR discontinuation

Blazing a path through the LIBOR transition

Explore our case study on how streamlining its contract management helped this global investment bank power ahead on the LIBOR transition and significantly reduce costs.

Back to top

Blazing a path through the LIBOR transition

LIBOR transition: Setting your firm up for success

Regulators globally have signaled that firms should transition away from the London Interbank Offered Rate (LIBOR) to alternative overnight risk-free rates (RFRs). Andrew Bailey, chief executive of the United Kingdom Financial Conduct Authority, has stipulated that this should happen by the end of 2021.

However, the rate is so embedded in the day-to-day activities of providers and users of financial services that completing transition will be a complex and time-consuming task which could give rise to major risks for firms and their customers. It is vital that boards take action now, but how do they navigate these issues, against a backdrop of uncertainty, and deliver one of the (if not the) biggest transformation projects they have ever faced? This report is designed to help board members and executives to understand what is needed to drive the transition.

US LIBOR transition newsletter

The Alternative Reference Rate Committee’s (ARRC) added two key points to their recommendation for spread adjustments for cash products in response to the feedback from their supplemental consultation on spread adjustments. The initial recommendation was for LIBOR to the Secured Overnight Financing Rate (SOFR) spread adjustment calculation based off of a five-year lookback median and a one-year transition period. The five-year lookback median largely aligns with International Swaps and Derivatives Association (ISDA)’s plan for derivatives, although ISDA does not include the one-year transition period.

LIBOR transition: An industry update and recent lessons learned

With the financial transition targeted for 2021 drawing near, financial services organizations are moving quickly to prepare themselves for a post-LIBOR world. Moreover, regulators are increasing their scrutiny of organizations' preparations and focus areas. We'll discuss:

  • The influence that global regulators are having on LIBOR transition and the adoption of alternative reference rates.
  • A snapshot of where organizations are in the broader transition life cycle.
  • An in-depth look into pain points organizations is facing as they transition away from LIBOR.

Participants will gain new insights on the approaching transition away from LIBOR, how regulators are preparing, and some of the lessons learned as organizations make their own preparations.

LIBOR transition: An industry update and recent lessons learned

View on demand

Impacts on the investment management sector

The LIBOR transition risk spans the economic risk of client portfolios, operational risk, funding risk, conduct risk, and legal risk. Given the importance of LIBOR across the financial services industry, the LIBOR transition poses significant transition risk if not addressed in a timely and comprehensive manner. As such, investment management firms need to have appropriate strategic planning and risk mitigation initiatives in place. Read more about some strategic planning and risk mitigation initiatives to consider, including: development of program governance, business impact analysis, identification of risks and timely implementation of risk mitigation, coordination across portfolios/funds, functions and geographic regions, firm-wide risk assessment, and development of strategic LIBOR transition roadmap for both investor and internal considerations.

Back to top

LIBOR Transition for Investment Managers
Did you find this useful?