Featured Product

    JFSA Survey Indicates More Preparations Required for LIBOR Transition

    March 19, 2020

    JFSA presented the results of a joint survey it conducted with BOJ on the quantitative London Inter-bank Offered Rate (LIBOR) exposures and the qualitative LIBOR transition progress. The survey was conducted on 278 financial institutions, including banks, securities companies, and insurance companies. The survey results highlight that, since the LIBOR transition requires comprehensive actions, specific preparations are needed with responsible and active involvement of management officials. As the next steps, JFSA and BOJ will monitor whether financial institutions take necessary actions in view of the time limit of end-2021. To this end, the two entities will deliberate on the need to set more specific core targets and conduct on-site monitoring, taking into account the progress in financial institutions’ preparations for LIBOR transition.

    As per the assessment, the key actions needed are as follows: 

    • Financial institutions with a large number of contracts maturing beyond end-2021 with no fallback provisions should press ahead with necessary actions for customers given the limited time available. They need to promptly set policies on new products referencing risk-free rat and on new contracts referencing LIBOR, so that the number of contracts referencing LIBOR will not increase.
    • Financial institutions with a larger number of contracts need to strengthen coordination among customer services, back office, and legal sections as they may incur more costs on those sections than anticipated. Even if they have fallback provisions, if they take the “amendment approach,” they need to prepare for scenarios where a number of consultations with customers can arise at one time.
    • Financial institutions that have not identified IT systems requiring upgrades need to do so promptly. Considering the time required to complete such upgrades, they need to prioritize which systems to upgrade first, clarify the schedule, and secure sufficient budgets for such upgrades.
    • Financial institutions that have issued bonds referencing LIBOR must take procedures according to the applicable laws of each jurisdiction to revise contractual terms; in principle, they need to host bondholders’ meetings for those issued in Japan, based on the Companies Act.
    • If financial institutions use LIBOR for their asset-liability management and other risk management, they need to consider reviewing their management framework.
    • Financial institutions need to identify issues and concerns associated with accounting and discuss them with outside auditors.

    The two-fold aim of this survey is to allow supervisory authorities to identify the financial institutions’ quantification of LIBOR exposure (the number of contracts referencing LIBOR), these institutions' progress toward transition from LIBOR to alternative reference rates, and their internal preparedness for this transition. The survey is planned to be conducted regularly to follow up the progress and status of LIBOR  transition. 


    Keywords: Asia Pacific, Japan, Banking, Insurance, Securities, LIBOR, Risk-Free Rates, Interest Rate Benchmarks, Derivatives, Benchmark Reforms, BOJ, JFSA

    Related Articles

    US Agencies Issue Several Regulatory and Reporting Updates

    The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.

    January 04, 2023 WebPage Regulatory News

    ECB Issues Multiple Reports and Regulatory Updates for Banks

    The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.

    January 01, 2023 WebPage Regulatory News

    HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements

    The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.

    December 30, 2022 WebPage Regulatory News

    EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR

    The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.

    December 29, 2022 WebPage Regulatory News

    CBIRC Revises Measures on Corporate Governance Supervision

    The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.

    December 29, 2022 WebPage Regulatory News

    HKMA Publications Address Sustainability Issues in Financial Sector

    The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.

    December 23, 2022 WebPage Regulatory News

    EBA Updates Address Basel and NPL Requirements for Banks

    The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.

    December 22, 2022 WebPage Regulatory News

    ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite

    The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.

    December 22, 2022 WebPage Regulatory News

    FCA Sets up ESG Committee, Imposes Penalties, and Issues Other Updates

    The Financial Conduct Authority (FCA) is seeking comments, until December 21, 2022, on the draft guidance for firms to support existing mortgage borrowers.

    December 20, 2022 WebPage Regulatory News

    FSB Reports Assess NBFI Sector and Progress on LIBOR Transition

    The Financial Stability Board (FSB) published a report that assesses progress on the transition from the Interbank Offered Rates, or IBORs, to overnight risk-free rates as well as a report that assesses global trends in the non-bank financial intermediation (NBFI) sector.

    December 20, 2022 WebPage Regulatory News
    RESULTS 1 - 10 OF 8697