Representatives of the Association of the Bank of Thailand and the Association of international banks have established a working group to prepare for the cessation of London Interbank Offered Rate (LIBOR). BOT held a working group meeting to discuss ways to prepare for the cessation of LIBOR. The group emphasized the importance of communication and raising awareness among Thai financial market participants. By March 2020, the working group expects to finalize guidelines for various issues related to the preparations toward LIBOR cessation.
To keep the market participants informed, the working group will publish progress report, along with conclusions about various issues; this information will be made available on the website of BOT. To make the transition as smooth and fair as possible for all parties, the working group has resolved to take actions in three key areas:
- Modify the text In financial contracts that reference LIBOR and THBFIX such as loan agreements, derivative contracts, or the terms and conditions of debt instruments
- Prepare commercial banks to support the changing of LIBOR
- Set interest rate to compensate in case of cessation of LIBOR and set direction of the reference interest rate of Thailand
In the meantime, the working group asks market participants that have financial transactions based on the LIBOR or THBFIX interest rate to expedite the exploration of existing transaction or contract volumes. It may consult with commercial banks or counterparties in advance go adjust existing contracts in a timely manner and to assess the initial impact in various areas. The end of the use of LIBOR by 2021 will directly affect financial transactions that reference LIBOR interest rates and indirectly affect certain other types of transactions related to THBFIX, which has a financial market in Thailand.
Related Link (in Thai): News Release
Keywords: Asia Pacific, Thailand, Banking, LIBOR, THBFIX, Interest Rate Benchmarks, BOT
Previous ArticleBOT Publishes Reporting Documents for Financial Data Set and TFRS 9
The European Banking Authority (EBA) published four draft principles to support supervisory efforts in assessing the representativeness of COVID-19-impacted data for banks using the internal ratings based (IRB) credit risk models.
The European Council and the European Parliament (EP) reached a provisional political agreement on the Corporate Sustainability Reporting Directive (CSRD).
The Prudential Regulation Authority (PRA) launched a consultation (CP6/22) that sets out proposal for a new Supervisory Statement on expectations for management of model risk by banks.
The European Commission (EC) published the Delegated Regulation 2022/954, which amends regulatory technical standards on specification of the calculation of specific and general credit risk adjustments.
The Hong Kong Monetary Authority (HKMA) announced that the Green and Sustainable Finance (GSF) Cross-Agency Steering Group has launched the information and data repositories and outlined the progress made in advancing the development of green and sustainable finance in Hong Kong.
The Bank for International Settlements (BIS) Innovation Hub updated its work program, announcing a set of projects across various centers.
The European Insurance and Occupational Pensions Authority (EIOPA) published two consultation papers—one on the supervisory statement on exclusions related to systemic events and the other on the supervisory statement on the management of non-affirmative cyber exposures.
The Network for Greening the Financial System (NGFS) published a report that explores the feasibility of integrating the G-Cubed general equilibrium model into the NGFS suite of models.
Certain members of the U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a letter to the Securities and Exchange Commission (SEC)
The European Insurance and Occupational Pensions Authority (EIOPA) published a consultation paper on the advice on the review of the securitization prudential framework in Solvency II.