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A Year End Update on the LIBOR Transition

The LIBOR Transition is not being postponed. In our study released in January, market participants emphasized that significant work would remain, along with the support of the regulators, to hit those transition deadlines. Find more details in our new report.

  • The IBA consultative release, supported by the major global regulatory bodies was both unsettling for many industry participants and raised more questions than answered. Forthcoming feedback is seen almost universally by large & small financial institutions and corporate end users as critical to ensure 2021 is a productive transition year for the industry. 
  • Client Transition Progress is quite mixed.  Q4 saw meaningful progress by some of the largest end user firms in the US, but a number have yet to invest.  Middle market firms, brokers, numerous fund managers and corporates still have meaningful progress required across contract review, operational, risk & system investments required to succeed.
  • Larger institutions, with some exceptions, are supportive of SOFR and expanding liquidity in the product with greater certainty forthcoming from the official sector.  Smaller and mid-size firms are open to other options. Efforts at building term structure into the new SOFR benchmark rate continue to be viewed as a valuable contributor to anticipated product transition. 
  • Institutions across the board agreed that a more uniform global regulatory approach with emphasis on better practices, certainty of dates on specific transition deadlines would be critical for success