Featured Product

    FSB Sets Out Roadmap for Transition to Alternative Reference Rates

    October 16, 2020

    FSB published a global transition roadmap for London Inter-bank Offered Rate (LIBOR). The roadmap sets out a timetable of actions for financial and non-financial sector firms to take to ensure a smooth LIBOR transition by the end of 2021. This roadmap is intended to inform those with exposure to LIBOR benchmarks of some of the steps they should be taking now and over the remaining period to the end of 2021 to successfully mitigate these risks. These prudent steps are intended to supplement the existing timelines or milestones from industry working groups and regulators.

    The LIBOR benchmarks are not guaranteed to continue to be available after the end of 2021 and, therefore, preparations should be underway to reduce reliance on these rates well ahead of that point. Use of LIBOR in the five LIBOR currencies (USD, GBP, EUR, JPY, and CHF) is widespread internationally. As such, transition away from LIBOR by the end of 2021 requires significant commitment and sustained effort from both financial and non-financial institutions across many LIBOR and non-LIBOR jurisdictions. The roadmap sets out clear actions, including the following, needed from financial firms and their clients to ensure a smooth LIBOR transition:

    • Firms should have already identified and assessed all existing LIBOR exposures and agreed on a project plan to transition in advance of the end of 2021. The firms that currently provide clients with products that reference LIBOR should have begun to implement a plan for communicating with end-users of LIBOR referencing products maturing beyond the end of 2021 to ensure that they are aware of the transition and the steps being taken to support moving those products to alternative reference rates.
    • By the effective date of the ISDA Fallbacks Protocol, FSB strongly encourages firms to have adhered to the Protocol subject to individual firms’ usual governance procedures and negotiations with counterparties, as necessary. Where the protocol is not used, other appropriate arrangements will need to be considered to mitigate risks. Providers of cleared and exchange-traded products linked to LIBOR should also ensure that these products incorporate equivalent fallback provisions as appropriate.
    • By the end of 2020, firms should be in a position to offer non-LIBOR-linked loans to their customers. This could be done either in terms of giving borrowers a choice in terms of the reference rate underlying their loans, or by working with borrowers to include language for conversion by the end of 2021 for any new, or refinanced, LIBOR-referencing loans.
    • By mid-2021, firms should have established formalized plans to amend legacy contracts and should have implemented the necessary system and process changes to enable transition to robust alternative reference rates. 
    • By the end of 2021, firms should be prepared for LIBOR to cease. All new business should either be conducted in alternative reference rates or be capable of switching at limited notice. For any legacy contracts for which it has not been possible to make these amendments, the implications of cessation or lack of representativeness should have been considered and discussed between the parties and steps taken to prepare for this outcome, as needed. All business critical systems and processes should either be conducted without reliance on LIBOR or be capable of being changed to run on this basis at limited notice.

     

    Related Links

    Keywords: International, Banking, Securities, LIBOR, Fallback Protocol, Legacy Contracts, Roadmap, Benchmark Reforms, FSB

    Related Articles
    News

    EBA Publishes Final Regulatory Standards on STS Securitizations

    The European Banking Authority (EBA) published the final draft regulatory technical standards specifying and, where relevant, calibrating the minimum performance-related triggers for simple.

    September 20, 2022 WebPage Regulatory News
    News

    ECB Further Reviews Costs and Benefits Associated with IReF

    The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.

    September 15, 2022 WebPage Regulatory News
    News

    EBA Publishes Funding Plans Report, Receives EMAS Certification

    The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).

    September 15, 2022 WebPage Regulatory News
    News

    MAS Launches SaaS Solution to Simplify Listed Entity ESG Disclosures

    The Monetary Authority of Singapore (MAS) set out the Financial Services Industry Transformation Map 2025 and, in collaboration with the SGX Group, launched ESGenome.

    September 15, 2022 WebPage Regulatory News
    News

    BCBS to Finalize Crypto Rules by End-2022; US to Propose Basel 3 Rules

    The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.

    September 15, 2022 WebPage Regulatory News
    News

    IOSCO Welcomes Work on Sustainability-Related Corporate Reporting

    The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)

    September 15, 2022 WebPage Regulatory News
    News

    BoE Allows One-Day Delay in Statistical Data Submissions by Banks

    The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.

    September 14, 2022 WebPage Regulatory News
    News

    ACPR Amends Reporting Module Timelines Under EBA Framework 3.2

    The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.

    September 14, 2022 WebPage Regulatory News
    News

    ECB Paper Discusses Disclosure of Climate Risks by Credit Agencies

    The European Central Bank (ECB) published a paper that examines how credit rating agencies accepted by the Eurosystem, as part of the Eurosystem Credit Assessment Framework (ECAF)

    September 13, 2022 WebPage Regulatory News
    News

    APRA to Modernize Prudential Architecture, Reduces Liquidity Facility

    The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.

    September 12, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8514