The LIBOR transition opens the door to a fundamental rethink of the use of data and technology, and how firms provide products and services to customers, says Bloomberg’s Bing Li. hat is the extent of a firm’s exposure to rates that are at risk of cessation (or will not be permitted for use)? What will LIBOR mean for funds transfer pricing? Combining unmatched experience and specialized skills across more than 40 industries and all business functions—underpinned by the world’s largest delivery network—Accenture works at the intersection of business and technology to help clients improve their performance and create sustainable value for their stakeholders. in large part due to LIBOR cessation and their inability to create LIBOR-based products moving forward. Recently, we worked with a Japanese bank to tackle this issue by creating new workflows involving the input of trade data using several channels and new calculation methods. This also adds to the importance that firms embed a proactive approach to identifying, tracking and mitigating conduct risk so they can satisfy supervisors and demonstrate that they are discharging their various duties to clients, in accordance with regulations such as the SMCR and International Organization of Securities Commission (IOSCO). As LIBOR transition gains momentum across workstreams, so should financial institutions’ exposure to associated risks. Accenture is a leading global professional services company, providing a broad range of services in strategy and consulting, interactive, technology and operations, with digital capabilities across all of these services. “ARRC Releases Vendor Survey and Buy-Side Checklist on Transition to SOFR,” Alternative Reference Rates Committee, January 31, 2020. Its manipulation resulted in fines of … Ready to take the next step in your digital transformation journey? Unfortunately, in the current environment, financial firms are under enormous additional operational pressure as a result of the Covid-19 fallout, creating new and urgent regulatory compliance, pricing, risk and business imperatives. “… close to $400 trillion in loans, securities and derivatives affected.”5. Prospa sets out to serve global diaspora of African entrepreneurs, How banks can be supported to achieve full open banking adoption, The LIBOR conundrum and problems with LIBOR, What are the issues that firms need to address, How to handle the adjusted reference rate (ARR), as ARR does not have maturities. Banking, Capital Markets and Insurance Monthly Regulatory Tracker – August 2020, ARRC urges members to prepare to adhere to ISDA’s protocol, Banking, Capital Markets and Insurance Monthly Regulatory Tracker – July 2020, Global regulators set target dates for LIBOR transition. by the world’s largest network of Advanced Technology and Intelligent Operations centers. Stay up to date on the latest news and strategies as financial services firms prepare to transition from LIBOR to SOFR. In its December 2019 progress report, the Financial Stability Board (FSB) called for significant commitment and sustained effort across jurisdictions. This becomes an opportunity to assess the viability of an institution’s entire ecosystem. Boards should consider the following three steps for setting up a LIBOR transition programme: 1. Is it the right time to make a change? While the European Union has a centralised regional rulebook, Asia currently does not. For many institutions, contract repositories are grouped by product line and/or business area. The London Interbank Offer Rate (‘LIBOR’) will cease to be in effect from 31 December 2021. While jurisdictions around the world have identified alternative RFRs – SOFR in the United States, SONIA in the UK, SORA for Singapore, AIOR in Malaysia, INDONIA for Indonesia, and Japan’s TONA, for example – financial services firms face the daunting task of needing to reconfigure major elements of their market data management to be ready for the transition, including daily reset mechanisms, compounding calculations, generation of forward curves and new or altered risk management systems. It is among the most comprehensive and inclusive of these types of changes to come into effect and offers an opportunity to truly undergo a transformation. It’s important to evaluate the health of the technology infrastructure and its ability to receive and process the new rates and calculations. Your email address will not be published. tech vendor community continues to work on required system changes as well as an overall outreach approach to assist banks, asset managers, insurance companies, investment advisors, and others in preparing and effectively integrating the new rate structure into their environment. NIIT Technologies Advisory SME’s John Speight and Joseph Mendel respond to the frequently asked questions on the LIBOR transition, including: Download this free white paper to learn more: FinTech Futures will use the details that you provide here to send you the white paper and share them with NIIT Technologies for informative purposes including follow-up on the white paper. See a demo of how AI technologies can be deployed to identify and remediate LIBOR contracts, to monitor and audit processes, and to gain key takeaways on how to lead your LIBOR transformation initiatives. transition. If you are mired in complex technology initiatives like most of us at Citisoft, your projects can easily overshadow regulatory changes “down the line.” But when it comes to LIBOR, the time to pay attention is upon us. Newsletter Author: Samantha Regan and Gerard Jacob. LIBOR is critical to trillions of dollars of flow across financial products globally, including in Asia. Adding to the pressure, the Alternate Reference Rate Committee (ARRC), a working group formed by the NY Federal Reserve, issued a request for information to the vendor committee to solicit input on timing of the upgrades and an understanding of the impact functionality.4 The good news: The tech vendor community continues to work on required system changes as well as an overall outreach approach to assist banks, asset managers, insurance companies, investment advisors and others in preparing and effectively integrating the new rate structure into their environment. This blog is intended for general informational purposes only, does not take into account the reader’s specific circumstances, may not reflect the most current developments, and is not intended to provide advice on specific circumstances. Contract remediation is expected to be a key area of focus when completing an institution’s data assessment. The benefits of ABBYY technology for LIBOR transition don’t end when LIBOR goes away. The Financial Conduct Authority and the Prudential Regulation Authority are running a series of joint supervisory meetings for the purpose of reviewing financial firms transition plans and mitigation of key risks series. While these London bank rates set LIBOR, the rate is used internationally and published for five currencies and in seven maturities, impacting investment vehicles derivative of those rates. Can firms overcome complexity in their LIBOR client outreach? What Does the LIBOR Transition Mean for Technology and Operations? There are an immense number of resources available for regulatory aficionados but here is my breakdown on what the tech and ops laymen in asset management need to know. Though systems are at the forefront of the technology remediation for the LIBOR transition, it is critical to understand that there will be upgrades needed for the statistical models as well. 3.0 Transition execution, operations and tech change Transition your business and contracts to new rates while maintaining operational readiness.
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